Neural stem cells (NSCs) are found along the neuraxis of the developing and mature central nervous system. They are found in defined niches that have been shown to regulate NSC behavior in a regionally distinct manner. Specifically, previous research has shown that myelin basic protein (MBP), when presented in the spinal cord niche, inhibits NSC proliferation and oligodendrogenesis. Herein, we investigate the cell-based mechanism(s) underlying this spinal-cord niche-derived MBP-mediated inhibition. We used reporter mice to sort for subpopulations of cells and found that spinal cord niche-derived microglia release a soluble factor in response to MBP that is responsible for NSC inhibition. Microglia, but not other niche cells, release soluble CD40/TNFRSF5 (sCD40) in the presence of MBP which may indirectly reduce activation of transmembrane CD40/TNFRSF5 receptor on both spinal cord and brain NSCs. This is consistent with sCD40 binding to CD40 ligand (CD40L) thereby preventing CD40 receptor binding on NSCs and inhibiting NSC proliferation. The identification of the cell-based mechanism that regulates NSC behavior in response to MBP, which is dysregulated in injury/disease, provides insight into a potential target for strategies to enhance neural repair through endogenous stem cell activation.