[ ${eta}ig-h3$ ] is a secretory protein that is induced by $TGF-{eta}$ and implicated in various disease conditions including fibrosis. We have previously reported that ${eta}ig-h3$ expression is implicated in astrocyte response to brain injury. In this study, we further investigated potential roles of ${eta}ig-h3$ protein in the injured central nervous system (CNS). We specifically assessed whether the treatment of microglial cells with ${eta}ig-h3$ can regulate microglial activity. Microglial cells are the prime effector cells in CNS immune and inflammatory responses. When activated, they produce a number of inflammatory mediators, which can promote neuronal injury. We prepared conditioned medium from the stable CHO cell line transfected with human ${eta}ig-h3$ cDNA. We then examined the effects of the conditioned medium on the LPS- or $IFN-{gamma}-mediated$ induction of proinflammatory molecules in microglial cells. Preincubation with the conditioned medium significantly attenuated LPS-mediated upregulation of $TNF-{alpha},;IL-1{eta}$, iNOS and COX-2 mRNA expression in BV2 murine microglial cells. It also reduced $IFN-{gamma}-mediated$ upregulation of $TNF-{alpha}$ and COX-2 mRNA expression but not iNOS mRNA expression. Assays of nitric oxide release correlated with the mRNA data, which showed selective inhibition of LPS-mediated nitric oxide production. Although the regulatory mechanisms need to be further investigated, these results suggest that astrocyte-derived ${eta}ig-h3$ may contribute to protection of the CNS from immune-mediated damage via controlling microglial inflammatory responses.