In multiple sclerosis (MS), soluble tumor necrosis factor (TNF) is detrimental via activation of TNF receptor 1 (TNFR1), whereas transmembrane TNF is beneficial primarily by activating TNF receptor 2 (TNFR2). Here, we investigate the role of TNFR2 in microglia and monocytes/macrophages in experimental autoimmune encephalomyelitis (EAE), a model of MS, by cell-specific gene targeting. We show that TNFR2 ablation in microglia leads to early onset of EAE with increased leukocyte infiltration, T cell activation, and demyelination in the central nervous system (CNS). Conversely, TNFR2 ablation in monocytes/macrophages results in EAE suppression with impaired peripheral T cell activation and reduced CNS T cell infiltration and demyelination. Our work uncovers a dichotomy of function for TNFR2 in myeloid cells, with microglial TNFR2 providing protective signals to contain disease and monocyte/macrophagic TNFR2 driving immune activation and EAE initiation. This must be taken into account when targeting TNFR2 for therapeutic purposes in neuroinflammatory diseases.