The neuropeptide galanin is widely expressed by many differing subsets of neurons in the nervous system. There is a marked upregulation in the levels of the peptide in a variety of nerve injury models and in the basal forebrain of humans with Alzheimer's disease. Here we demonstrate that galanin expression is specifically and markedly upregulated in microglia both in multiple sclerosis (MS) lesions and shadow plaques. Galanin expression is also upregulated in the experimental autoimmune encephalomyelitis (EAE) model of MS, although solely in oligodendrocytes. To study whether the observed increase in expression of galanin in inflammatory demyelination might modulate disease activity, we applied the EAE model to a panel of galanin transgenic lines. Over-expression of galanin in transgenic mice (Gal-OE) abolishes disease in the EAE model, whilst loss-of-function mutations in galanin or galanin receptor-2 (GalR2) increase disease severity. The pronounced effects of altered endogenous galanin or GalR2 expression on EAE disease activity may reflect a direct neuroprotective effect of the neuropeptide via activation of GalR2, similar to that previously described in a number of neuronal injury paradigms. Irrespective of the mechanism(s) by which galanin alters EAE disease activity, our findings imply that galanin/GalR2 agonists may have future therapeutic implications for MS.