Microglia are resident macrophages in brain and spinal cord that function at the frontline of innate immunity to respond and repair injuries and diseases. Despite the increasing attention to microglia, however, there are many critical barriers in our knowledge regarding the molecular mechanisms that activate microglia and the exact roles of microglial activation in neurodegenerative diseases. This new BLR&D Merit proposal focuses on the role of frontotemporal lobar dementia (FTLD) gene Progranulin (Grn [gene], PGRN [protein]) in microglial activation and neurodegeneration in mouse models of PGRN deficiency and in FTLD patients with Grn mutations. Progranulin is a haploinsufficient gene frequently mutated in FTLD patients. Using global and microglia-specific Progranulin knockout (Grn-/-) mice, we have recently shown that loss of PGRN promotes microglial activation and neuronal degeneration in toxin-induced injury conditions. In our current work, we show that PGRN deficiency leads to an age-dependent increase in microgliosis. In addition, large scale microarray analyses in control and Grn-/- aging cohorts show progressive up-regulation of lysosomal and innate immune response genes, including many key components in the classical complement activation pathway. Interestingly, the persistent neuroinflammation in PGRN mutants most prominently affects the ventral posterior medial (VPM) and ventral posterior lateral (VPL) nuclei of thalamus, which show features of neurodegeneration, including severe synaptic loss and progressive loss of neuronal cell body, Consistent with the critical role of these thalamic nuclei in connection with the barrel cortex and in habitual learning, aging Grn-/- mutants exhibit obssessive compulsive behavioral deficits (OCD). These results raise the hypothesis that PGRN deficiency leads to abnormal activation of microglia and facilitates neurodegeneration in a neural circuit critical for sensorimotor functions. Our overall objective is to elucidate the mechanisms by which PGRN deficiency lead to progressive microglial activation, pro-inflammatory gene expression, and contributions to neurodegeneration in a neural circuit that is critical for sensoimotor integration and highly relevant to human disease. We propose three specific aims to achieve this goal. In Aim 1, we will test the hypothesis that PGRN deficiency in microglia cell autonomously activates pro-inflammatory molecular signatures and functional characteristics. Aim 2 will generate inducible microglia-specific Grn (CX3CR1-CreER;Grnfl/fl) to test the hypothesis that PGRN deficient microglia cell autonomously promote circuit-specific neurodegeneration. In Aim 3, we will use pharmacological and genetic approaches to inhibit complement activation, and to test the hypothesis that aberrant complement activation contributes to the synaptic degeneration in the thalamocortical ciruits in Grn-/- mutants. Our results will provide clear mechanistic insights on the role of PGRN in microglia activation, complement-mediated neurodegeneration, and the role of microglial activation in the progression of neurodegeneration in Grn-/- mouse brains and in FTLD.