In addition to disease-associated microglia (DAM), microglia with MHC-II and/or IFN-I signatures may form additional pathogenic subsets that are relevant to neurodegeneration. However, the significance of such MHC-II and IFN-I signatures remains elusive. We demonstrate here that these microglial subsets play intrinsic roles in orchestrating neurotoxic properties of neurotoxic Eomes⁺ Th cells under the neurodegeneration-associated phase of experimental autoimmune encephalomyelitis (EAE) that corresponds to progressive multiple sclerosis (MS). Microglia acquire IFN-signature after sensing ectopically expressed long interspersed nuclear element-1 (L1) gene. Furthermore, ORF1, an L1-encoded protein aberrantly expressed in the diseased central nervous system (CNS), stimulated Eomes⁺ Th cells after Trem2-dependent ingestion and presentation in MHC-II context by microglia. Interestingly, administration of an L1 inhibitor significantly ameliorated neurodegenerative symptoms of EAE concomitant with reduced accumulation of Eomes⁺ Th cells in the CNS. Collectively, our data highlight a critical contribution of new microglia subsets as a neuroinflammatory hub in immune-mediated neurodegeneration.