Neurodegeneration occurring in multiple sclerosis (MS) contributes to the progression of disability. It is therefore important to identify and neutralize the mechanisms that promote neurodegeneration in MS. Here, we report that oxidized phosphatidylcholines (OxPCs) found in MS lesions, previously identified as end-product markers of oxidative stress, are potent drivers of neurodegeneration. Cultured neurons and oligodendrocytes were killed by OxPCs, and this was ameliorated by microglia. After OxPC injection, mouse spinal cords developed focal demyelinating lesions with prominent axonal loss. The depletion of microglia that accumulated in OxPC lesions exacerbated neurodegeneration. Single-cell RNA sequencing of lesioned spinal cords identified unique subsets of TREM2high mouse microglia responding to OxPC deposition. TREM2 was detected in human MS lesions, and TREM2−/− mice exhibited worsened OxPC lesions. These results identify OxPCs as potent neurotoxins and suggest that enhancing microglia-mediated OxPC clearance via TREM2 could help prevent neurodegeneration in MS.