Recent genome-wide association studies have reported that, amongst other microglial genes, variants in TREM2 can profoundly increase the incidence of developing Alzheimer's disease (AD). We have investigated the role of TREM2 in primary microglial cultures from wild-type mice by using siRNA to decrease Trem2 expression, and in parallel from knock-in mice heterozygous or homozygous for the Trem2 R47H AD risk variant (from the Jackson laboratories). The prevailing phenotype of Trem2 R47H knock-in mice was decreased expression levels of Trem2 in microglia, which resulted in decreased density of microglia in the hippocampus. Overall, primary microglia with reduced Trem2 expression, either by siRNA or from the R47H knock-in mice, displayed a similar phenotype. Comparison of the effects of decreased Trem2 expression under conditions of LPS pro-inflammatory or IL4 anti-inflammatory stimulation revealed the importance of Trem2 in driving a number of the genes up-regulated in the anti-inflammatory phenotype, whether treated with RNAi or performed with microglia carrying the R47H variant. In particular, Trem2 knockdown decreased levels of the transcription factor STAT6. STAT6 is the key mediator downstream from IL4 and controls expression of genes including Arg1, which also showed decreased IL4-induced expression when Trem2 expression was decreased. LPS-induced pro-inflammatory stimulation suppressed Trem2 expression, thus preventing TREM2's anti-inflammatory drive. The importance of Trem2 activity in regulating the pro- and anti-inflammatory balance of microglia, particularly mediating effects of the IL4-regulated anti-inflammatory pathway, has important implications for fighting neurodegenerative disease.