Microgliosis is a common phenomenon in neurodegenerative disorders, including retinal dystrophies. To identify candidate genes involved in microglial activation, we used DNA-microarray analysis of retinal microglia from wild-type and retinoschisin-deficient (Rs1h(-/Y)) mice, a prototypic model for inherited retinal degeneration. Thereby, we cloned a novel 76 aa protein encoding a microglia/macrophage-restricted whey acidic protein (WAP) termed activated microglia/macrophage WAP domain protein (AMWAP). The gene consists of three exons and is located on mouse chromosome 11 in proximity to a chemokine gene cluster. mRNA expression of AMWAP was detected in microglia from Rs1h(-/Y) retinas, brain microglia, and other tissue macrophages. AMWAP transcription was rapidly induced in BV-2 microglia upon stimulation with multiple TLR ligands and IFN-gamma. The TLR-dependent expression of AMWAP was dependent on NF-kappaB, whereas its microglia/macrophage-specific transcription was regulated by PU.1. Functional characterization showed that AMWAP overexpression reduced the proinflammatory cytokines IL-6 and IL-1beta and concomitantly increased expression of the alternative activation markers arginase 1 and Cd206. Conversely, small interfering RNA knockdown of AMWAP lead to higher IL-6, IL-1beta, and Ccl2 transcript levels, whereas diminishing arginase 1 and Cd206 expression. Moreover, AMWAP expressing cells had less migratory capacity and showed increased adhesion in a trypsin-protection assay indicating antiserine protease activity. In agreement with findings from other WAP proteins, micromolar concentrations of recombinant AMWAP exhibited significant growth inhibitory activity against Escherichia coli, Pseudomonas aeruginosa, and Bacillus subtilis. Taken together, we propose that AMWAP is a counter-regulator of proinflammatory microglia/macrophage activation and a potential modulator of innate immunity in neurodegeneration.