Abstract Background Traumatic brain injury (TBI) is a critical public health and socio-economic problem worldwide. A growing body of evidence supports the involvement of inflammatory events in TBI. It has been reported that resident microglia and infiltrating monocytes promote an inflammatory reaction that leads to neuronal death and eventually behavioral and cognitive impairment. Currently, there is no effective treatment for TBI and the development of new therapeutic strategies is a scientific goal of highest priority. Laquinimod, an orally administered neuroimmunomodulator initially developed for the treatment of multiple sclerosis, might be a promising neuroprotective therapy for TBI. Herein, we aim to investigate the hypothesis that laquinimod will reduce the central nervous system (CNS) damage caused by TBI. Methods To test our hypothesis, Ccr2rfp/+ Cx3cr1 gfp/+ mice were submitted to a moderate TBI induced by fluid percussion. Sham controls were submitted only to craniotomy. Mice were treated daily by oral gavage with laquinimod (25 mg/kg) 7 days before and 3 days after TBI. The brains of mice treated or not treated with laquinimod were collected at 3 and 120 days post injury, and brain morphological changes, axonal injury, and neurogenesis were evaluated by microscopy analysis. We also isolated microglia from infiltrating monocytes, and the expression of immune gene mRNAs were analyzed by employing a quantitative NanoString nCounter technique. Results Laquinimod prevented ventricle enlargement caused by TBI in the long term. Immunohistochemical analyses revealed decreased axonal damage and restored neurogenesis in the laquinimod-treated TBI group at early stage (3 days post injury). Notably, laquinimod inhibited the monocytes infiltration to the brain. Hierarchial clustering demonstrated that the microglial gene expression from the TBI group treated with laquinimod resembles the sham group more than the TBI-water control group. Conclusions Administration of laquinimod reduced lesion volume and axonal damage and restored neurogenesis after TBI. Laquinimod might be a potential therapy strategy to improve TBI long-term prognosis.