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Genetic findings have highlighted key roles for microglia in the pathology of neurodegenerative conditions such as Alzheimer's disease (AD). A number of mutations in the microglial protein triggering receptor expressed on myeloid cells 2 (TREM2) have been associated with increased risk for developing AD, most notably the R47H/+ substitution. We employed gene editing and stem cell models to gain insight into the effects of the TREM2 R47H/+ mutation on human-induced pluripotent stem cell-derived microglia. We found transcriptional changes affecting numerous cellular processes, with R47H/+ cells exhibiting a proinflammatory gene expression signature. TREM2 R47H/+ also caused impairments in microglial movement and the uptake of multiple substrates, as well as rendering microglia hyperresponsive to inflammatory stimuli. We developed an in vitro laser-induced injury model in neuron-microglia cocultures, finding an impaired injury response by TREM2 R47H/+ microglia. Furthermore, mouse brains transplanted with TREM2 R47H/+ microglia exhibited reduced synaptic density, with upregulation of multiple complement cascade components in TREM2 R47H/+ microglia suggesting inappropriate synaptic pruning as one potential mechanism. These findings identify a number of potentially detrimental effects of the TREM2 R47H/+ mutation on microglial gene expression and function likely to underlie its association with AD.