Maladaptive inflammation is a major suspect in progressive neurodegeneration, but the underlying mechanisms are difficult to envisage in part because reactive glial cells at lesion sites secrete both proinflammatory and anti-inflammatory mediators. We now report that astrocytes modulate neuronal resilience to inflammatory insults through the phosphatase calcineurin. In quiescent astrocytes, inflammatory mediators such as tumor necrosis factor-alpha(TNF-alpha) recruits calcineurin to stimulate a canonical inflammatory pathway involving the transcription factors nuclear factor kappa B (NF kappa B) and nuclear factor of activated T-cells (NFAT). However, in reactive astrocytes, local anti-inflammatory mediators such as insulin-like growth factor I also recruit calcineurin but, in this case, to inhibit NF kappa B/NFAT. Proof of concept experiments in vitro showed that expression of constitutively active calcineurin in astrocytes abrogated the inflammatory response after TNF-alpha or endotoxins and markedly enhanced neuronal survival. Furthermore, regulated expression of constitutively active calcineurin in astrocytes markedly reduced inflammatory injury in transgenic mice, in a calcineurin-dependent manner. These results suggest that calcineurin forms part of a molecular pathway whereby reactive astrocytes determine the outcome of the neuroinflammatory process by directing it toward either its resolution or its progression.