The progression of Alzheimer's disease (AD) correlates with the propagation of hyperphosphorylated tau (pTau) from the entorhinal cortex to the hippocampus and neocortex. Neutral sphingomyelinase2 (nSMase2) is critical in the biosynthesis of extracellular vesicles (EVs), which play a role in pTau propagation. We recently conjugated DPTIP, a potent nSMase2 inhibitor, to hydroxyl-PAMAM-dendrimer nanoparticles that can improve brain delivery. We showed that dendrimer-conjugated DPTIP (D-DPTIP) robustly inhibited the spread of pTau in an AAV-pTau propagation model. To further evaluate its efficacy, we tested D-DPTIP in the PS19 transgenic mouse model. Unexpectantly, D-DPTIP showed no beneficial effect. To understand this discrepancy, we assessed D-DPTIP's brain localization. Using immunofluorescence and fluorescence-activated cell-sorting, D-DPTIP was found to be primarily internalized by microglia, where it selectively inhibited microglial nSMase2 activity with no effect on other cell types. Furthermore, D-DPTIP inhibited microglia-derived EV release into plasma without affecting other brain-derived EVs. We hypothesize that microglial targeting allowed D-DPTIP to inhibit tau propagation in the AAV-hTau model, where microglial EVs play a central role in propagation. However, in PS19 mice, where tau propagation is independent of microglial EVs, it had a limited effect. Our findings confirm microglial targeting with hydroxyl-PAMAM dendrimers and highlight the importance of understanding cell-specific mechanisms when designing targeted AD therapies.