Secreted protein acidic rich in cysteine (SPARC) is a matricellular protein that modulates the activity of growth factors, cytokines, and extracellular matrix to play multiple roles in tissue development and repair, such as cellular adhesion, migration, and proliferation. Throughout the CNS, SPARC is highly localized in mature ramified microglia, but its role in microglia—in development or during response to disease or injury—is not understood. In the postnatal brain, immature amoeboid myeloid precursors only induce SPARC expression after they cease proliferation and migration, and transform into mature, ramified resting microglia. SPARC null/CX3CR1-GFP reporter mice reveal that SPARC regulates the distribution and branching of mature microglia, with significant differences between cortical gray and white matter in both controls and SPARC nulls. Following ischemic and excitotoxic lesion, reactive, hypertrophic microglia rapidly downregulate and release SPARC at the lesion, concomitant with reactive, hypertrophic perilesion astrocytes upregulating SPARC. After photothrombotic stroke in the forelimb sensorimotor cortex, SPARC nulls demonstrate enhanced microgliosis in and around the lesion site, which accompanies significantly enhanced functional recovery by 32 d after lesion. Microglia from SPARC nulls also intrinsically proliferate at a greater rate in vitro—an enhanced effect that can be rescued by the addition of exogenous SPARC. SPARC is thus a novel regulator of microglial proliferation and structure, and, in addition to regulating glioma progression, may play an important role in differently regulating the gray and white matter microglial responses to CNS lesion—and modulating behavioral recovery—after injury.