Despite recent advances in the diagnosis and treatment of multiple sclerosis, we still lack a consensus regarding the causes, pathogenesis, and mechanisms of disease progression. Current evidence indicates that multiple sclerosis is an inflammatory neurodegenerative disorder in which both adaptive and innate immunity play important roles in initiation and maintenance of the disease. Recent evidence supports the notion of molecular pathologic abnormalities beyond the plaques and dysfunction of neurons in normal appearing areas, in addition to the multifocal demyelination and axonal loss, as important features that may underlie early reversible changes in the disease. Chronic failure of remyelination, axonal regeneration, and neuronal dysfunction may contribute to disease progression. This article discusses the emerging molecular evidence for the progression of multiple sclerosis with particular focus on alterations in the local central nervous system microenvironment of neural and glial cells. The molecular pathways leading to structural and functional neurodegeneration and those that prevent regeneration need to be identified in order to design new therapeutic strategies that can halt or even reverse disease progression.