Microglia, the innate immune cells of the CNS, perform critical inflammatory and noninflammatory functions that maintain normal neural function. For example, microglia clear misfolded proteins, elaborate trophic factors, and regulate and terminate toxic inflammation. In Alzheimer's disease (AD), however, beneficial microglial functions become impaired, accelerating synaptic and neuronal loss. Better understanding of the molecular mechanisms that contribute to microglial dysfunction is an important objective for identifying potential strategies to delay progression to AD. The inflammatory cyclooxygenase/prostaglandin E2 (COX/PGE2) pathway has been implicated in preclinical AD development, both in human epidemiology studies and in transgenic rodent models of AD. Here, we evaluated murine models that recapitulate microglial responses to Aβ peptides and determined that microglia-specific deletion of the gene encoding the PGE2 receptor EP2 restores microglial chemotaxis and Aβ clearance, suppresses toxic inflammation, increases cytoprotective insulin-like growth factor 1 (IGF1) signaling, and prevents synaptic injury and memory deficits. Our findings indicate that EP2 signaling suppresses beneficial microglia functions that falter during AD development and suggest that inhibition of the COX/PGE2/EP2 immune pathway has potential as a strategy to restore healthy microglial function and prevent progression to AD.