The inflammatory response in the CNS begins with the movement of leukocytes across the blood-brain barrier in a multistep process that requires cells to pass through a perivascular space before entering the parenchyma. The molecular mechanisms that orchestrate this movement are not known. The chemokine CXCL12 is highly expressed throughout the CNS by microendothelial cells under normal conditions, suggesting it might play a role maintaining the blood-brain barrier. We tested this hypothesis in the setting of experimental autoimmune encephalomyelitis (EAE) by using AMD3100, a specific antagonist of the CXCL12 receptor CXCR4. We demonstrate that the loss of CXCR4 activation enhances the migration of infiltrating leukocytes into the CNS parenchyma. CXCL12 is expressed at the basolateral surface of CNS endothelial cells in normal spinal cord and at the onset of EAE. This polarity is lost in vessels associated with an extensive parenchymal invasion of mononuclear cells during the peak of disease. Inhibition of CXCR4 activation during the induction of EAE leads to loss of the typical intense perivascular cuffs, which are replaced with widespread white matter infiltration of mononuclear cells, worsening the clinical severity of the disease and increasing inflammation. Taken together, these data suggest a novel anti-inflammatory role for CXCL12 during EAE in that it functions to localize CXCR4-expressing mononuclear cells to the perivascular space, thereby limiting the parenchymal infiltration of autoreactive effector cells.