Inhibitors of glycogen synthase kinase 3 (GSK3) are being explored as therapy for chronic inflammatory diseases. We previously demonstrated that the GSK inhibitor lithium is beneficial in experimental autoimmune encephalomyelitis (EAE), the mouse model of multiple sclerosis. In this study we report that lithium suppresses EAE induced by encephalitogenic interferon-γ (IFN-γ)-producing T helper (Th1) cells but not by interleukin (IL)-17-producing T helper (Th17) cells. The therapeutic activity of lithium required functional IFN-γ-signaling, but not the receptor for type I IFN (IFNAR). Inhibitor/s of GSK3 attenuated IFN-γ dependent activation of the transcription factor STAT1 in naïve T cells as well as in encephalitogenic T cells and Th1 cells. The inhibition of STAT1 activation was associated with reduced IFN-γ production and decreased expansion of encephalitogenic Th1 cells. Furthermore, lithium treatment induced Il27 expression within the spinal cords of mice with EAE. In contrast, such treatment of Ifngr(-/-) mice did not induce Il27 and was associated with lack of therapeutic response. Our study reveals a novel mechanism for the efficacy of GSK3 targeting in EAE, through the IFN-γ-STAT1 axis that is independent IFNAR-STAT1 axis. Overall our findings set the framework for the use of GSK3 inhibitors as therapeutic agents in autoimmune neuroinflammation.