Alzheimer's disease (AD) is the leading cause of dementia. Although the etiology of AD remains controversial, the amyloid hypothesis suggests that beta-amyloid (Abeta) peptides may contribute to brain dysfunction, and microglial activation has become increasingly regarded as a potential contributor to disease pathogenesis. Microglial activation is characterized by morphological changes and by production of various effectors, and activated neuroinflammation concurrent with increased oxidative stress may contribute to damage to neurons. However, recently there has been a recognition that microglia may also play a neuroprotective role through their release of neurotrophic factors and through phagocytosis of Abeta. Thus, there is growing consensus that a favorable combination of diminished microglia-mediated neuroinflammation and enhanced Abeta clearance may be critical in AD therapy. In this review, we will discuss the role of microglial activation in AD and how pharmacologic manipulation of microglia might bear upon the treatment of AD.