Estrogen is a disease-modifying factor in multiple sclerosis (MS) and its animal model experimental autoimmune encephalomyelitis (EAE) via estrogen receptor alpha (ERα). However, the mechanisms by which ERα signaling contributes to changes in disease pathogenesis have not been completely elucidated. Here, we demonstrate that ERα deletion in dendritic cells (DCs) of mice induces severe neurodegeneration in the central nervous system in a mouse EAE model and resistance to interferon beta (IFNβ), a first-line MS treatment. Estrogen synthesized by extragonadal sources is crucial for controlling disease phenotypes. Mechanistically, activated ERα directly interacts with TRAF3, a TLR4 downstream signaling molecule, to degrade TRAF3 via ubiquitination, resulting in reduced IRF3 nuclear translocation and transcription of membrane lymphotoxin (mLT) and IFNβ components. Diminished ERα signaling in DCs generates neurotoxic effector CD4+ T cells via mLT-lymphotoxin beta receptor (LTβR) signaling. Lymphotoxin beta receptor antagonist abolished EAE disease symptoms in the DC-specific ERα-deficient mice. These findings indicate that estrogen derived from extragonadal sources, such as lymph nodes, controls TRAF3-mediated cytokine production in DCs to modulate the EAE disease phenotype.