In multiple sclerosis, the pathological interaction between autoreactive Th cells and mononuclear phagocytes in the CNS drives initiation and maintenance of chronic neuroinflammation. Here, we found that intrathecal transplantation of neural stem/precursor cells (NPCs) in mice with experimental autoimmune encephalomyelitis (EAE) impairs the accumulation of inflammatory monocyte-derived cells (MCs) in the CNS, leading to improved clinical outcome. Secretion of IL-23, IL-1, and TNF-α, the cytokines required for terminal differentiation of Th cells, decreased in the CNS of NPC-treated mice, consequently inhibiting the induction of GM-CSF–producing pathogenic Th cells. In vivo and in vitro transcriptome analyses showed that NPC-secreted factors inhibit MC differentiation and activation, favoring the switch toward an antiinflammatory phenotype. Tgfb2–/– NPCs transplanted into EAE mice were ineffective in impairing MC accumulation within the CNS and failed to drive clinical improvement. Moreover, intrathecal delivery of TGF-β2 during the effector phase of EAE ameliorated disease severity. Taken together, these observations identify TGF-β2 as the crucial mediator of NPC immunomodulation. This study provides evidence that intrathecally transplanted NPCs interfere with the CNS-restricted inflammation of EAE by reprogramming infiltrating MCs into antiinflammatory myeloid cells via secretion of TGF-β2.