Depression is closely linked with microglial activation and neuro-inflammation. Peroxisome proliferator-activated receptor-γ (PPAR-γ) plays an important role in M2 activation of microglia. Forkhead box (FOX) O3a has been implicated in the regulation of mood-relevant behaviour. However, little is known about the inflammatory mechanisms of in the microglia of the brain. Here, we have investigated the role of microglial FOXO3a/PPAR-γ in the development of depression. The effect of FOXO3a on microglia inflammation was analysed in vitro and in lipopolysaccharide (LPS)-induced depression-like behaviours in vivo. ChIP-seq and Dual-luciferase reporter assays were used to confirm the interaction between FOXO3a and PPAR-γ. Behavioural changes were measured, while inflammatory cytokines, microglial phenotype and morphological properties were determined by ELISA, qRT-PCR, western blotting and immunostaining. Overexpression of FOXO3a significantly attenuated expression of PPAR-γ and enhanced the microglial polarization towards the M1 phenotype, while knockdown of FOXO3a had the opposite effect. FOXO3a binds to the promoters of PPAR-γ and decreases its transcription activity. Importantly, deacetylation and activation of FOXO3a regulate LPS-induced neuro-inflammation by inhibiting the expression of PPAR-γ in microglia cells, supporting the antidepressant potential of histone deacetylase inhibitors. Microglial FOXO3a deficiency in mice alleviated LPS-induced neuro-inflammation and depression-like behaviours but failed to reduce anxiety behaviour, whereas pharmacological inhibition of PPAR-γ by GW9662 restored LPS-induced microglial activation and depressive-like behaviours in microglial FOXO3a-deficient mice. FOXO3a/PPAR-γ axis plays an important role in microglial activation and depression, identifying a new therapeutic avenue for the treatment of major depression.