Among the chemokine family, fractalkine shows unusual properties: it exists as a membrane‐bound and soluble protein, and both fractalkine and its receptor CX₃CR1 are expressed predominantly in the central nervous system. In rat cell culture models, the chemokine fractalkine was expressed in neurons and microglia, but not in astrocytes and its receptor exclusively localized to microglial cells, where its expression was downregulated by treatment with the bacterial endotoxin (LPS). In microglial cultures, LPS (10 ng/ml) induced a marked increase in the release of the proinflammatory cytokine tumor necrosis factor‐α (TNF‐α). The effects of LPS on TNF‐α secretion were partially blocked (30%) by fractalkine and the effects of fractalkine were reversed by a polyclonal anti‐fractalkine antibody. When microglial‐associated fractalkine was neutralized by anti‐fractalkine antibody, the LPS response was increased by 80%, suggesting tonic activation of microglial fractalkine receptors by endogenous fractalkine. The effects of the antibody were antagonized by the addition of fractalkine. LPS‐activated microglia were neurotoxic when added to neuronal hippocampal culture, producing 20% neuronal death, as measured by NeuN‐positive cell counting. An anti‐fractalkine antibody produced neurotoxic effects of similar magnitude in this co‐culture system and also markedly potentiated the neurotoxic effects of LPS‐activated microglia (40% neuronal death). These results suggest that endogenous fractalkine might act tonically as an anti‐inflammatory chemokine in cerebral tissue through its ability to control and suppress certain aspects of microglial activation. These data may have relevance to degenerative conditions such as multiple sclerosis, in which cerebral inflammatory processes may be activated. GLIA 29:305–315, 2000. © 2000 Wiley‐Liss, Inc.