Alzheimer’s disease (AD) is the most prevalent neurodegenerative disorder. Microglia play an essential role in supporting normal CNS functions, but in disease may contribute to neurodegeneration. We identified homeostatic (M0) and neurodegenerative (MGnD) microglia, also referred to as disease associated microglia (DAM), that are regulated by the reciprocal suppression of TGFb and induction of APOE signaling in different neurodegenerative mouse models including AD. However, the role of these two major phenotypes and how they affect disease progression remains a major question. Importantly, targeting microglial APOE signaling restored the homeostatic signature of microglia associated with neuroprotection in acute and chronic models of neurodegeneration. APOE signaling suppressed PU.1 and TGFβ signaling in a cell-autonomous manner. Human APOE has three variants: ε2, ε3, and ε4. APOE ε4 is the strongest genetic risk factor for late-onset Alzheimer’s disease (LOAD). Our preliminary data show: 1) Increased expression of PU.1 in microglia from humanized APOE ε4 mice; 2) Expression of APOE ε4 in microglia impaired microglial response to induce a MGnD phenotype and 3) Deletion of microglial APOE ε4 restored MGnD phenotype in APP/PS1 mice associated with astrocytes recruitment towards Ab-plaques and reduction in neuritic plaques. These data indicate that APOE ε4 signaling is a crucial regulatory pathway in microglia in APP/PS1 mice. Based on these findings, we hypothesize that in APOE ε4 carriers, APOE ε4 ‘locks’ microglia in their homeostatic state leading to impaired phagocytic functions and dysregulated microglia-astrocyte crosstalk, which could have fundamental consequences for AD development. We will address our hypothesis in the following aims: Aim 1: Determine the role of APOE ε4 on transcriptional regulation of microglia and their crosstalk with astrocytes in AD and non-demented subjects carrying different APOE alleles. We will determine whether human APOE ε4 affects transcriptional signatures of cellular response, interactive pathways, and functional regulation, focusing on microglia and astrocytes. Aim 2: Validate the spatial differences in APOE ε4 microglia and astrocytes at single-cell resolution. We will validate the differences in microglia and astrocytic gene expression in brain, using immunohistochemistry of specific markers and multiplexed error-robust fluorescence in situ hybridization (MERFISH). IN SUMMARY, this study aims to validate whether APOE ε4 impairs transcriptional, spatial, and functional regulation of MGnD-microglia and their crosstalk with astrocytes in AD brain.