Estrogen provides neuroprotection against neurodegenerative diseases, including Parkinson's disease. Its effects may stem from interactions with neurons, astrocytes, and microglia. We demonstrate here in primary cultures of rat mesencephalic neurons that estrogen protects them from injury induced by conditioned medium obtained from lipopolysaccharide (LPS)‐activated microglia. LPS‐induced nitrite production and tumor necrosis factor‐α up‐regulation in microglia were blocked by estrogen pretreatment. Estrogen neuroprotection was related to microglial activation of estrogen receptors (ERs), insofar as the protective effect of the microglia‐conditioned medium was overridden by pretreatment of microglia with the ER antagonist ICI 182,780. On the other hand, the specific ERα antagonist, MPP dihydrochloride, only partially blocked the effects of estrogen, suggesting that estrogen protection was mediated via both ERα and ERβ. LPS treatment did not change ERα mRNA levels in microglia, astrocytes, and neurons, but it up‐regulated ERβ mRNA levels in microglia and astrocytes. Similarly, increased ERβ protein levels were detected in LPS‐activated microglia. More interesting was that immunocytochemical analysis revealed that ERβ was localized in the cytoplasm of microglia and in the cell nucleus of astrocytes and neurons. In summary, our results support the notion that estrogen inhibits microglial activation and thus exhibits neuroprotective effects through both ERα and ERβ activation. The cytoplasm location of microglial ERβ suggests the possible involvement of nonclassical effects of estrogen on microglia. Changes in microglial ERβ expression levels may modulate such effects of estrogen. © 2005 Wiley‐Liss, Inc.