Tumour necrosis factor-alpha (TNF-alpha) plays a central role in inflammatory events including those taking place in the central nervous system (CNS), and has been implicated as a key pathogenic mediator in several human inflammatory, infectious and autoimmune CNS disorders. Using transgenic and gene knockout mice we have investigated the role of deregulated TNF-alpha production in the CNS. We show that the overexpression of wild-type murine or human TNF-alpha transgenes by resident CNS astrocytes or neurons in sufficient to trigger a neurological disorder characterised by ataxia, seizures and paresis, with histopathological features of chronic CNS inflammation and white matter degeneration. Furthermore, we show that transmembrane human TNF-alpha is sufficient to trigger CNS inflammation and degeneration when overexpressed by astrocytes but not by neurons, indicating that target cells mediating the neuroinflammatory activities of TNF-alpha localise in the vicinity of astrocytes rather than neurons. Our results establish that both soluble and transmembrane molecular forms of TNF-alpha can play critical roles in vivo in the pathogenesis of CNS inflammation and demyelination, and validate TNF-alpha transgenic and mutant mice as important models for the further study of related human CNS diseases.