Interferon stimulated exonuclease gene 20 (ISG20) has been reported to be correlated with macrophage infiltration in glioblastoma (GBM) in previous bioinformatics-based studies. This study explores the exact effect of ISG20 on macrophage polarization in GBM. ISG20 expression in GBM tissues and cells was determined by RT-qPCR and/or immunohistochemistry. GBM cells were co-cultured with M0 macrophages (PMA-stimulated THP-1 cells) in vitro, followed by flow cytometry and ELISA to analyze the M2 polarization of macrophages. Fluorescence-contained GBM cells were intracranially injected into nude mice along with M0 macrophages to generate orthotopic xenograft tumor models. Upstream regulator of ISG20 was predicted using bioinformatics. Loss- or gain-of-function assays of Fos like 2 (FOSL2) and ISG20 were performed in GBM cells. DNA methylation level of FOSL2 was analyzed by bisulfite sequencing analysis. ISG20 was found highly expressed in GBM tissues and cells. ISG20 silencing in GBM cells decreased CD206 and CD163 levels in the co-cultured macrophages and reduced secretion of IL-10 and TGF-β. It also enhanced survival of nude mice bearing xenograft tumors, blocked tumor growth, and suppressed M2 polarization of macrophages in vivo. FOSL2, highly expressed in GBM, bound to the ISG20 promoter to activate its transcription. FOSL2 silencing similarly blocked M2 polarization of macrophages, which was negated by ISG20 overexpression. The high FOSL2 expression in GBM was attributed to DNA hypomethylation. This study demonstrates that FOSL2 is highly expressed in GBM due to DNA hypomethylation. It activates transcription of ISG20, thus promoting M2 polarization of macrophages and GBM development.