Abstract Background Toll-like receptor (TLR) signaling is emerging as an important component of neurodegeneration. TLR7 senses viral RNA and certain endogenous miRNAs to initiate innate immune responses leading to neurodegeneration. Alcoholism is associated with hippocampal degeneration, with preclinical studies linking ethanol-induced neurodegeneration with central innate immune induction and TLR activation. The endogenous miRNA let-7b binds TLR7 to cause neurodegeneration. Methods TLR7 and other immune markers were assessed in postmortem human hippocampal tissue that was obtained from the New South Wales Tissue Bank. Rat hippocampal-entorhinal cortex (HEC) slice culture was used to assess specific effects of ethanol on TLR7, let-7b, and microvesicles. Results We report here that hippocampal tissue from postmortem human alcoholic brains shows increased expression of TLR7 and increased microglial activation. Using HEC slice culture, we found that ethanol induces TLR7 and let-7b expression. Ethanol caused TLR7-associated neuroimmune gene induction and initiated the release let-7b in microvesicles (MVs), enhancing TLR7-mediated neurotoxicity. Further, ethanol increased let-7b binding to the danger signaling molecule high mobility group box-1 (HMGB1) in MVs, while reducing let-7 binding to classical chaperone protein argonaute (Ago2). Flow cytometric analysis of MVs from HEC media and analysis of MVs from brain cell culture lines found that microglia were the primary source of let-7b and HMGB1-containing MVs. Conclusions Our results identify that ethanol induces neuroimmune pathology involving the release of let-7b/HMGB1 complexes in microglia-derived microvesicles. This contributes to hippocampal neurodegeneration and may play a role in the pathology of alcoholism