During experimental autoimmune encephalomyelitis (EAE), autoreactive Th1 T cells invade the CNS. Before performing their effector functions in the target organ, T cells must recognize Ag presented by CNS APCs. Here, we investigate the nature and activity of the cells that present Ag within the CNS during myelin oligodendrocyte glycoprotein-induced EAE, with the goal of understanding their role in regulating inflammation. Both infiltrating macrophages (Mac-1+ CD45 high) and resident microglia (Mac-1+ CD45 int) expressed MHC-II, B7-1, and B7-2. Macrophages and microglia presented exogenous and endogenous CNS Ags to T cell lines and CNS T cells, resulting in IFN-γ production. In contrast, Mac-1− cells were inefficient APCs during EAE. Late in disease, after mice had partially recovered from clinical signs of disease, there was a reduction in Ag-presenting capability that correlated with decreased MHC-II and B7-1 expression. Interestingly, although CNS APCs induced T cell cytokine production, they did not induce proliferation of either T cell lines or CNS T cells. This was attributable to production by CNS cells (mainly by macrophages) of NO. T cell proliferation was restored with an NO inhibitor, or if the APCs were obtained from inducible NO synthase-deficient mice. Thus, CNS APCs, though essential for the initiation of disease, also play a down-regulatory role. The mechanisms by which CNS APCs limit the expansion of autoreactive T cells in the target organ include their production of NO, which inhibits T cell proliferation, and their decline in Ag presentation late in disease.