PROJECT SUMMARY Alzheimer’s disease (AD) is the most prominent neurodegenerative disorder worldwide, and is pathologically characterized by Aβ plaques and tau tangles. Growing evidence indicates that microglial receptors such as TREM2 can play a role in both Aβ and tau pathology. TREM2 is proteolytically processed by ADAM proteases to generate soluble TREM2 (sTREM2). Although sTREM2 levels are significantly elevated in cerebrospinal fluid (CSF) along with tau and phospho-tau during early stages of AD onset, nothing was known with respect to sTREM2 function prior to our previous R01 study. Our group and others established that TREM2 is a potential Aβ receptor which mediates microglial activation in response to Aβ oligomers (Zhao et al., 2018). Moreover, our prior mPI team showed that AAV-mediated sTREM2 expression could reduce Aβ accumulation and promote microglial activation (Zhong et al., 2019). Interestingly, the TREM2 cleavage site was recently shown to occur at H157, where an AD-associated H157Y TREM2 variant enhanced TREM2 ADAM-dependent TREM2 cleavage. We therefore integrated the H157Y mutation into the murine Trem2 locus, and characterized effects of H157Y Trem2 in a 5xFAD background. We found that similar to sTREM2 expression, H157Y Trem2 reduced Aβ plaque load and enhanced Aβ clearance, suggesting that enhanced sTREM2 associated with H157Y Trem2 can reduce Aβ. Unexpectedly, we also observed that unlike sTREM2, H157Y Trem2 suppressed microglial activation signatures (manuscript in revision), suggesting that in addition to potential sTREM2-dependent effects associated with enhanced sTREM2 shedding, H157Y Trem2 may also be associated with potential loss-of- function phenotypes linked to elevated TREM2 cleavage and inactivation. A key question remains how H157Y Trem2 can enhance Aβ clearance, and is yet associated with elevated AD risk. Our results indicate that Trem2 deletion can aggravate tau dispersion and pathogenesis through enhancing distribution of seed-competent tau in microglial exosomes (Zhu et al., 2022). Our preliminary results also indicate that sTREM2 enhances internalization of tau oligomers in microglia, and promotes trafficking of internalized tau to pre-exosomal compartments, which suggests that although H157Y Trem2 confers neuroprotective effects with respect to Aβ clearance, H157Y Trem2 could potentially aggravate tau pathology through combined gain-of-function (sTREM2) and loss-of-function (TREM2 cleavage/inactivation) effects. To decipher gain and loss-of-function effects associated with H157Y Trem2 with respect to Aβ and tau, we propose to use a combination of mouse AD (5xFAD, PS19; AAV-tau dispersion models) and human cell models (ESC- derived microglia models) to distinguish between effects of Trem2 KO, H157Y and sTREM2 on Aβ and tau pathology and microglial activation states, as well as distinguish effects of H157Y TREM2 in mouse and human microglia using ESC-derived xenotransplantation models in hMCSF/5xFAD mouse...