Microglia activation and associated inflammatory response play pivotal roles in the pathogenesis of different neurodegenerative diseases including neonatal hypoxic brain injury. Here we show that caspase3 expression was upregulated in activated microglia after hypoxic exposure, and remarkably, the cell viability remained unaffected alluding to the possibility of a non-apoptotic role of caspase3 in activated microglia. Chemical inhibition of caspase3 suppressed microglia activation as evident by an obvious reduction in expression of proinflammatory mediators and NF-κB signaling activation. Hypoxia induced caspase3 activation was TLR4 dependent as supported by the fact that caspase3 activation was hindered in cells with TLR4 knockdown. Interestingly, melatonin treatment significantly suppressed caspase3 activation. More importantly, melatonin also inhibited the increase in TLR4 protein and mRNA expression in hypoxic microglia. Inhibition of TLR4 expression by melatonin was also found in microglia of postnatal rats subjected to hypoxic exposure. Taken together, it is concluded that melatonin could inhibit TLR4 expression in hypoxic microglia followed by suppression of caspase3 activation leading to decrease in production of proinflammatory mediators.