Microglia, the resident immune cells of the CNS, are known to respond to injuries, infection and inflammation in the CNS by producing proinflammatory cytokines and phagocytosing cell debris and pathogens. In this study, we investigated the expression pattern and role of dihydropyrimidinase-like 3 (Dpysl3), a member of collapsin response mediator protein family, on the inflammatory reaction of microglia. Microarray analysis comparing the global gene expression profile of ameboid and ramified microglia has shown that Dpysl3 is mainly expressed in ameboid microglia in the 5-day postnatal rat brain. Immunohistochemical analysis revealed that Dpysl3 was intensely expressed in ameboid microglial cells in the rat brain till postnatal 7th day and then gradually diminished in ramified microglia of 2 weeks postnatal rat brain. Further, in vitro analysis confirmed that Dpysl3 expression was induced in activated BV-2 microglia treated with lipopolysaccharide (LPS). It is well documented that microglial activation by LPS increased the expression of inducible nitric oxide synthase (iNOS) and proinflammatory cytokines through the activation of nuclear factor kappa-light-chain-enhancer of activated B cells (NF-κB) activity in BV-2 microglia. However, siRNA-mediated knockdown of Dpysl3 prevented the LPS-induced expression of iNOS and cytokines including interleukin-1 beta, and tumor necrosis factor-alpha as well as nuclear translocation of NF-κB in microglia. Remarkably, knockdown of Dpysl3 inhibited the migration of activated microglia coupled with deranged actin filament configuration (as revealed by F-actin cytoskeleton expression) in lamellipodia projecting from the cells. Knockdown of Dpysl3 also inhibited the phagocytic ability of activated microglia. These findings suggest that knockdown of Dpysl3 can inhibit activation, migration and phagocytic capability of microglia and consequently reduce neuroinflammation.