Transactive response DNA-binding protein-43 (TDP-43) is a multifunctional nucleic acid binding protein present in ubiquitinated inclusions in tissues of patients with amyotrophic lateral sclerosis (ALS) and fronto-temporal lobar degeneration (FTLD). The ALS-associated mutations in the glycine-rich C-terminal domain of TDP-43 established a causal link between TDP-43 and disease, and conferred both loss- and gain-of-function properties in neurons. Since it has not been established whether these intra-neuronal changes are sufficient to cause ALS or whether non-cell autonomous neuronal-glial signaling could be involved, we investigated the extracellular effects of TDP-43 proteins on microglial activation and motoneuron toxicity. Wild-type, truncated 25kD C-terminal fragments, or mutant forms of TDP-43 all activated microglia and upregulated NOX2, TNF-α, and IL-1β, with WT forms being significantly less effective in activating microglia. This response to TDP-43 was mediated by its interaction with the microglial surface CD14 receptor and subsequent stimulation of the NF-κB and AP-1 pathways, as well as the intracellular inflammasome. At the cell surface, CD14 blocking antibodies suppressed microglial NF-κB activation and proinflammatory cytokine production mediated by TDP-43. Intracellularly, the NLRP3 inflammasome was induced and functional caspase-1 was produced augmenting the release of mature IL-1β. Further, TDP-43-mediated activation of microglia caused a proinflammatory cascade that was toxic to motoneurons. In the absence of microglia, TDP-43 was not toxic to motoneurons. The ability of TDP-43 to promote CD14-mediated activation of microglial NF-κB and AP-1 pathways, as well as the NLRP3 inflammasome, suggests the involvement of a non-cell autonomous proinflammatory signaling that enhances motoneuron injury, and may offer novel therapeutic targets in ALS.