Numerous studies have now shown that microglia secrete factors which may influence the growth and survival of cells in the CNS. We employed glia-neuron co-cultures to investigate the net effect of soluble products from secretory microglia upon astroglia and neurons following microglial activation by a phagocytic signal. Stimulation of microglia produced soluble factors that both increase the number of astroglia and decrease the number of neurons. The astroglial proliferating activity was blocked when incubated with an interleukin-1 (IL-1) receptor antagonist while the neurotoxic effect was inhibited by a N-methyl-D-aspartate (NMDA) receptor antagonist. Recombinant IL-1 served as a potent mitogen for cultured astroglia and promoted neuron survival by indirect actions upon astrocytes. These observations suggest that reactive microglia mediate both astrogliosis and neuronal injury through the simultaneous release of cell growth factors and poisons. The net effect of secretion products from phagocytic microglia is to diminish neuronal survival.