Japanese encephalitis virus (JEV) is the leading cause of viral encephalitis in the Asia-Pacific region, causing an estimated 70,000-100,000 clinical cases annually, with a fatality rate of 20-30%, and frequent long-term neurological sequelae among survivors. Recovery from Japanese Encephalitis (JE) requires not only effective viral clearance but also timely resolution of the immune response and restoration of immune homeostasis. However, the mechanisms governing this transition remain unknown. We identified apolipoprotein E (ApoE) as a key regulator of inflammation resolution during recovery from JE. Using a mouse model encompassing asymptomatic, symptomatic, and lethal disease trajectories, combined with single-cell spatial transcriptomics and RNA sequencing, we show that ApoE is strongly upregulated in microglia, myeloid cells, and T cells in symptomatic survivors, coinciding with the adoption of anti-inflammatory phenotypes. In contrast, immune cells from mice with lethal disease fail to induce ApoE and remain persistently pro-inflammatory. Moreover, ApoE-deficient mice mount dysregulated immune responses, deteriorate rapidly, and are unable to recover after symptom onset. In humans, ApoE exists as three major isoforms (ε2, ε3, and ε4) with distinct neurobiological properties. Analysis of cerebrospinal fluid (CSF) from patients with acute encephalitis syndrome in central Laos reveals that ApoE ε2 carriers exhibit significantly lower CSF neutrophil proportions and shorter hospital stays, consistent with reported neuroprotective effects of this isoform. Together, these findings identify ApoE as a critical regulator of neuroinflammation resolution following JEV infection, with ApoE isoform-specific effects influencing recovery. ApoE-dependent resolution pathways therefore represent promising therapeutic targets for pathological encephalitis.