Alzheimer's disease (AD), the most common form of dementia, is characterized by the abnormal accumulation of amyloid plaques and hyperphosphorylated tau aggregates, as well as microgliosis. Hemizygous missense variants in Triggering Receptor Expressed on Myeloid Cells 2 (TREM2) are associated with elevated risk for developing late-onset AD. These variants are hypothesized to result in loss of function, mimicking TREM2 haploinsufficiency. However, the consequences of TREM2 haploinsufficiency on tau pathology and microglial function remain unknown. We report the effects of partial and complete loss of TREM2 on microglial function and tau-associated deficits. In vivo imaging revealed that microglia from aged TREM2-haploinsufficient mice show a greater impairment in their injury response compared with microglia from aged TREM2-KO mice. In transgenic mice expressing mutant human tau, TREM2 haploinsufficiency, but not complete loss of TREM2, increased tau pathology. In addition, whereas complete TREM2 deficiency protected against tau-mediated microglial activation and atrophy, TREM2 haploinsufficiency elevated expression of proinflammatory markers and exacerbated atrophy at a late stage of disease. The differential effects of partial and complete loss of TREM2 on microglial function and tau pathology provide important insights into the critical role of TREM2 in AD pathogenesis.