Experimental autoimmune encephalomyelitis (EAE) is an animal model of demyelinating autoimmune disease, such as multiple sclerosis (MS), which is characterized by central nervous system white matter lesions, microglial activation, and peripheral T-cell infiltration secondary to blood-brain barrier disruption. We have previously shown that treatment with tuftsin, a tetrapeptide generated from IgG proteolysis, dramatically improves disease symptoms in EAE. Here, we report that microglial expression of Neuropilin-1 (Nrp1) is required for tuftsin-driven amelioration of EAE symptoms. Nrp1 ablation in microglia blocks microglial signaling and polarization to the anti-inflammatory M2 phenotype, and ablation in either the microglia or immunosuppressive regulatory T cells (Tregs) reduces extended functional contacts between them and Treg activation, implicating a role for microglia in the activation process, and more generally, how immune surveillance is conducted in the CNS. Taken together, our findings delineate the mechanistic action of tuftsin as a candidate therapeutic against immune-mediated demyelinating lesions.