The C allele of rs11136000 variant in the clusterin (CLU) gene represents the third strongest known genetic risk factor for late-onset Alzheimer's disease. However, whether this single-nucleotide polymorphism (SNP) is functional and what the underlying mechanisms are remain unclear. In this study, the CLU rs11136000 SNP is identified as a functional variant by a small-scale CRISPR-Cas9 screen. Astrocytes derived from isogenic induced pluripotent stem cells (iPSCs) carrying the "C" or "T" allele of the CLU rs11136000 SNP exhibit different CLU expression levels. TAR DNA-binding protein-43 (TDP-43) preferentially binds to the "C" allele to promote CLU expression and exacerbate inflammation. The interferon response and CXCL10 expression are elevated in cytokine-treated C/C astrocytes, leading to inhibition of oligodendrocyte progenitor cell (OPC) proliferation and myelination. Accordingly, elevated CLU and CXCL10 but reduced myelin basic protein (MBP) expression are detected in human brains of C/C carriers. Our study uncovers a mechanism underlying reduced white matter integrity observed in the CLU rs11136000 risk "C" allele carriers.