Abstract Background Chondroitin sulfate proteoglycans (CSPGs) are potent inhibitors of axonal regrowth and remyelination. More recently, they have also been highlighted as a modulator of macrophage infiltration into the central nervous system in experimental autoimmune encephalomyelitis, an inflammatory model of multiple sclerosis. Methods We interrogated results from single nucleotide polymorphisms (SNPs) lying in or close to genes regulating CSPG metabolism in the summary results from two publicly available systematic studies of multiple sclerosis (MS) genetics. A demyelinating injury model in the spinal cord of exostosin-like 2 deficient (EXTL2^-/-) mice was used to investigate the effects of dysregulation of EXTL2 on remyelination. Cell cultures of bone marrow-derived macrophages and primary oligodendrocyte precursor cells and neurons were supplemented with purified CSPGs or conditioned media to assess potential mechanisms of action. Results The strongest evidence for genetic association was seen for SNPs mapping to the region containing the glycosyltransferase exostosin-like 2 (EXTL2), an enzyme that normally suppresses CSPG biosynthesis. Six of these SNPs showed genome-wide significant evidence for association in one of the studies with concordant and nominally significant effects in the second study. We then went on to show that a demyelinating injury to the spinal cord of EXTL2^−/− mice resulted in excessive deposition of CSPGs in the lesion area. EXTL2^−/− mice had exacerbated axonal damage and myelin disruption relative to wild-type mice, and increased representation of microglia/macrophages within lesions. In tissue culture, activated bone marrow-derived macrophages from EXTL2^−/− mice overproduce tumor necrosis factor α (TNFα) and matrix metalloproteinases (MMPs). Conclusions These results emphasize CSPGs as a prominent modulator of neuroinflammation and they highlight CSPGs accumulating in lesions in promoting axonal injury.