In damaged brain, inflammation occurs as a host defense mechanism. However, brain inflammation has a double-edged effect on brain damage. Inflammation protects the brain from infection, but aggravates the injury of surrounding tissue. Therefore, negative regulatory mechanisms of brain inflammation exist to prevent prolonged and extensive inflammation. The first part of this thesis showed that astrocytes, the most abundant cells in the brain modulate microglial activation by regulating the microglial levels of reactive oxygen species (ROS). Astrocyte culture-conditioned media (ACM) suppressed IFN-gamma- nor LPS-induced ROS production, leading to reduced iNOS expression and NO release in microglia. Treatment of microglia with ACM increased the expression level and activity of hemeoxygenase-1 (HO-1) through the activation of nuclear factor E2-related factor 2 (Nrf2) transcription factor. The active component(s) in ACM was/were heat-labile and smaller than 3 kD. Furthermore, phosphoinositide-3 kinase (PI3K) mediates ACM-induced HO-1 expression. Mimickers of HO-1 products such as bilirubin, ferrous iron and a carbon monoxide (CO)-releasing molecule also reduced IFN-gamma-induced iNOS expression and/or NO release. Damaged astrocytes and neurons also down-regulate microglial activation through HO-1 expression. Therefore, astrocytes and neuron appears to cooperate with microglia to prevent excessive inflammatory responses in the brain by regulating microglial ROS production. The second part of this thesis showed that adenosine could modulate microglial activation. In response to adenosine, Nrf2 was translocated from the cytosol to the nuclei, bound to ARE, and then HO-1 promoter activity increased. PI3K and its downstream, Akt, appeared to mediate adenosine-induced HO-1 expression since adenosine induced Akt phosphorylation and inhibitors of PI3K (LY294002 and wortmanin) reduced adenosine-induced HO-1 expression. These results suggest that adenosine could be an endogenous regulator of brain inflammation through the modulation of microglial ROS production. Taken together, these results suggest that astrocytes and neuron, and an endogenous factor, adenosine, could regualte microglia-mediated brain inflammation to minimize inflammation-induced brain damage.