Increasing evidence supports the involvement of microRNAs (miRNAs) in inflammatory and immune processes in prion neuropathogenesis. MiRNAs are small, non-coding RNA molecules which are emerging as key regulators of numerous cellular processes. We established miR-146a over-expression in prion-infected mouse brain tissues concurrent with the onset of prion deposition and appearance of activated microglia. Expression profiling of a variety of central nervous system derived cell-lines revealed that miR-146a is preferentially expressed in cells of microglial lineage. Prominent up-regulation of miR-146a was evident in the microglial cell lines BV-2 following TLR2 or TLR4 activation and also EOC 13.31 via TLR2 that reached a maximum 24-48 hours post-stimulation, concomitant with the return to basal levels of transcription of induced cytokines. Gain- and loss-of-function studies with miR-146a revealed a substantial deregulation of inflammatory response pathways in response to TLR2 stimulation. Significant transcriptional alterations in response to miR-146a perturbation included downstream mediators of the pro-inflammatory transcription factor, nuclear factor-kappa B (NF-κB) and the JAK-STAT signaling pathway. Microarray analysis also predicts a role for miR-146a regulation of morphological changes in microglial activation states as well as phagocytic mediators of the oxidative burst such as CYBA and NOS3. Based on our results, we propose a role for miR-146a as a potent modulator of microglial function by regulating the activation state during prion induced neurodegeneration.