Converging lines of evidence indicate dysregulation of the key immunoregulatory molecule CD45 (also known as leukocyte common antigen) in Alzheimer's disease (AD). We report that transgenic mice overproducing amyloid-β peptide (Aβ) but deficient in CD45 (PSAPP/CD45(-/-) mice) faithfully recapitulate AD neuropathology. Specifically, we find increased abundance of cerebral intracellular and extracellular soluble oligomeric and insoluble Aβ, decreased plasma soluble Aβ, increased abundance of microglial neurotoxic cytokines tumor necrosis factor-α and interleukin-1β, and neuronal loss in PSAPP/CD45(-/-) mice compared with CD45-sufficient PSAPP littermates (bearing mutant human amyloid precursor protein and mutant human presenilin-1 transgenes). After CD45 ablation, in vitro and in vivo studies demonstrate an anti-Aβ phagocytic but proinflammatory microglial phenotype. This form of microglial activation occurs with elevated Aβ oligomers and neural injury and loss as determined by decreased ratio of anti-apoptotic Bcl-xL to proapoptotic Bax, increased activated caspase-3, mitochondrial dysfunction, and loss of cortical neurons in PSAPP/CD45(-/-) mice. These data show that deficiency in CD45 activity leads to brain accumulation of neurotoxic Aβ oligomers and validate CD45-mediated microglial clearance of oligomeric Aβ as a novel AD therapeutic target.