Viral encephalitis is characterized by a series of immunological reactions that can control virus infection in the brain, but dysregulated responses may cause excessive inflammation and brain damage. Microglia are brain-resident myeloid cells that are specialized in surveilling the local CNS environment and in case of viral brain infection they contribute to the control of the infection and to restriction of viral dissemination. Here, we report that after exposure to neurotropic vesicular stomatitis virus (VSV), murine in vitro microglia cultures showed rapid upregulation of a broad range of pro-inflammatory and antiviral genes, which were stably expressed over the entire 8 h infection period. Additionally, a set of immunomodulatory genes was upregulated between 6 and 8 h post infection. In microglia cultures, the induction of several immune response pathways including cytokine responses was dependent on mitochondrial antiviral-signaling protein (MAVS). Consequently, in Mavs-deficient microglia the control of virus propagation failed as indicated by augmented virus titers and the accumulation of viral transcripts. Thus, in the analyzed in vitro system, MAVS signaling is critically required to achieve full microglia activation and to mediate profound antiviral effects. In Mavs-deficient mice, intranasal VSV instillation caused higher disease severity than in WT mice and virus dissemination was noticed beyond the olfactory bulb. Virus spread to inner regions of the olfactory bulb, i.e., the granular cell layer, correlated with the recruitment of highly inflammatory non-microglia myeloid cells into the olfactory bulb in Mavs−/− mice. Furthermore, increased cytokine levels were detected in the nasal cavity, the olfactory bulb and in other brain regions. Thus, microglial MAVS signaling is critically needed for virus sensing, full microglia activation, and for orchestration of protective immunity in the virus-infected CNS.