Inflammatory cells including macrophages and microglia synthesize and release the oxysterol, 25-hydroxycholesterol (25HC), which has antiviral and immunomodulatory properties. Here, we examined the effects of lipopolysaccharide (LPS), an activator of innate immunity, on 25HC production in microglia, and the effects of LPS and 25HC on CA1 hippocampal synaptic plasticity and learning. In primary microglia, LPS markedly increases expression of cholesterol 25-hydroxylase (Ch25h), the key enzyme involved in 25HC synthesis, and increases the levels of secreted 25HC. Wild type microglia produced higher levels of 25HC than Ch25h knockout (KO) microglial with or without LPS. LPS treatment also disrupts long-term potentiation (LTP) in hippocampal slices via induction of a form of NMDA receptor-dependent metaplasticity. The inhibitory effects of LPS on LTP were mimicked by exogenous 25HC, and were not observed in slices from Ch25h KO mice. In vivo, LPS treatment also disrupts LTP and inhibits one-trial learning in wi...