Neurodegenerative diseases are characterized by chronic microglial over-activation and oxidative stress. It is now beginning to be recognized that reactive oxygen species (ROS) produced by either microglia or the surrounding environment not only impact neurons but also modulate microglial activity. In this review, we first analyze the hallmarks of pro-inflammatory and anti-inflammatory phenotypes of microglia and their regulation by ROS. Then, we consider the production of reactive oxygen and nitrogen species by NADPH oxidases and nitric oxide synthases and the new findings that also indicate an essential role of glutathione (γ-glutamyl-l-cysteinylglycine) in redox homeostasis of microglia. The effect of oxidant modification of macromolecules on signaling is analyzed at the level of oxidized lipid by-products and sulfhydryl modification of microglial proteins. Redox signaling has a profound impact on two transcription factors that modulate microglial fate, nuclear factor kappa-light-chain-enhancer of activated B cells, and nuclear factor (erythroid-derived 2)-like 2, master regulators of the pro-inflammatory and antioxidant responses of microglia, respectively. The relevance of these proteins in the modulation of microglial activity and the interplay between them will be evaluated. Finally, the relevance of ROS in altering blood brain barrier permeability is discussed. Recent examples of the importance of these findings in the onset or progression of neurodegenerative diseases are also discussed. This review should provide a profound insight into the role of redox homeostasis in microglial activity and help in the identification of new promising targets to control neuroinflammation through redox control of the brain.