The clearance of damaged myelin sheaths is critical to ensure functional recovery from neural injury. Here we show a previously unidentified role for microvessels and their lining endothelial cells in engulfing myelin debris in spinal cord injury (SCI) and experimental autoimmune encephalomyelitis (EAE). We demonstrate that IgG opsonization of myelin debris is required for its effective engulfment by endothelial cells and that the autophagy-lysosome pathway is crucial for degradation of engulfed myelin debris. We further show that endothelial cells exert critical functions beyond myelin clearance to promote progression of demyelination disorders by regulating macrophage infiltration, pathologic angiogenesis and fibrosis in both SCI and EAE. Unexpectedly, myelin debris engulfment induces endothelial-to-mesenchymal transition, a process that confers upon endothelial cells the ability to stimulate the endothelial-derived production of fibrotic components. Overall, our study demonstrates that the processing of myelin debris through the autophagy-lysosome pathway promotes inflammation and angiogenesis and may contribute to fibrotic scar formation.