Inflammation plays a central role in the processes associated with neurodegeneration. The inflammatory response is mediated by activated microglia that release inflammatory mediators to the neuronal environment. Microglia-derived lysosomal cathepsins, including cathepsin X, are increasingly recognized as important mediators of the inflammation involved in lipopolysaccharide (LPS)-induced neuroinflammation. The current study was undertaken to investigate the role of cathepsin X and its molecular target, γ-enolase, in neuroinflammation and to elucidate the underlying mechanism. We determined that the exposure of activated BV2 and EOC 13.31 cells to LPS led to increased levels of cathepsin X protein and activity in the culture supernatants in a concentration- and time-dependent manner. In contrast, LPS stimulation of these two cells reduced the release of active γ-enolase in a manner regulated by the cathepsin X activity. Cathepsin X inhibitor AMS36 significantly reduced LPS-induced production of nitric oxide, reactive oxygen species and the pro-inflammatory cytokines interleukin-6 and tumor necrosis factor-α from BV2 cells. Inhibition of cathepsin X suppressed microglial activation through the reduced caspase-3 activity, together with diminished microglial cell death and apoptosis, and also through inhibition of the activity of the mitogen-activated protein kinases. Further, SH-SY5Y treatment with culture supernatants of activated microglial cells showed that cathepsin X inhibition reduces microglia-mediated neurotoxicity. These results indicate that up-regulated expression and increased release and activity of microglial cathepsin X leads to microglia activation-mediated neurodegeneration. Cathepsin X inhibitor caused neuroprotection via its inhibition of the activation of microglia. Cathepsin X could thus be a potential therapeutic target for neuroinflammatory disorders. •Microglia activation induces cathepsin X expression and its activity.•Cathepsin X inhibition suppresses microglia activation.•Cathepsin X mediates microglia activation-mediated neurodegeneration.•Cathepsin X inhibition exerts neuroprotection.