Microglial cells play a major role in the pathogenesis of many neurological diseases by exacerbating neuronal and non-neuronal cell death, but the mechanisms involved are unclear. To investigate the microglial-neuronal interactions, we used the murine BV-2 microglial cell line and the human neuronal-like SK-N-SH neuroblastoma cell line in a co-culture system that enabled proximity-dependent interaction and communication, a trans-well system that allowed proximity-independent communication through diffusible molecules only, and a conditioned media system through which no proximity-dependent interactions or cell-to-cell communication is possible. Activation of BV-2 cells with lipopolysaccharide and interferon-gamma (LPS/IFN-gamma) decreased viability of the BV-2 cells alone and in co-cultures with SK-N-SH cells, but not SK-N-SH cells grown alone. In contrast, activation of BV-2 cells in the trans-well and conditioned media system did not have any effect on the viability of SK-N-SH cells, suggesting that microglia must be in close proximity to the neural cells to elicit cytotoxicity. To determine the molecules involved in proximity-dependent cell death, inhibitors of microglial activation were investigated. Only the specific inducible nitric oxide synthase (iNOS) inhibitor S-methylisothiourea, and hypothermia, which is known to suppress microglial iNOS expression, prevented cell death after LPS/IFN-gamma activation. These results suggest that activated microglia release nitric oxide that is, at least partially, responsible for proximity-dependent microglial-mediated neural toxicity.