To test the hypothesis that macrophage migration inhibitory factor (MIF) plays a role in macrophage invasion during virus‐induced encephalitis, we analyzed the expression and cellular localization of MIF in the Borna disease virus (BDV)‐infected rat brain, monitored monocyte/macrophage infiltration, and evaluated the influence of anti‐inflammatory treatment with dexamethasone. MIF mRNA expression was restricted to neurons and remained unchanged after BDV infection or after dexamethasone treatment of either BDV‐infected or uninfected control rats. In contrast, MIF protein immunoreactivity (ir) was not only seen in neurons but also in glia. After BDV‐induced encephalitis and treatment of uninfected rats with dexamethasone, MIF ir was only slightly altered in neurons but moderately enhanced in tanycytes, ependyma, and choroid plexus epithelium and markedly increased or induced in astrocyte end‐feet at the blood‐brain barrier (BBB). The increase in MIF ir in astrocytes after BDV infection was blocked by dexamethasone. The induction or enhancement of MIF ir at the BBB significantly correlated with reduced numbers of infiltrating ED1‐positive monocytes/macrophages after BDV infection. Increased macrophage invasion was observed in regions where no astrocytic MIF was detected. The BDV‐ or dexamethasone‐induced accumulation of MIF protein in astrocytes in vivo in absence of detectable astrocytic MIF mRNA expression is most likely due to MIF translocation from neurons rather than to a constitutive or induced MIF mRNA expression in astrocytes. In conclusion, we provide evidence that translocation of MIF from neurons or other extracellular sources into astrocytes is likely to modulate the inflammatory process during the course of virus‐induced encephalitis by limiting monocyte/macrophage migration through the BBB. GLIA 37:291–306, 2002. © 2002 Wiley‐Liss, Inc.