Recently, large-scale human genetics studies identified a rare coding variant in the ABI3 gene that is associated with an increased risk of Alzheimer’s disease (AD). However, pathways by which ABI3 contributes to the pathogenesis of AD are unknown. To address this question, we determined whether loss of ABI3 function affects pathological features of AD in the 5XFAD mouse model. We demonstrate that the deletion of Abi3 locus significantly increases amyloid β (Aβ) accumulation and decreases microglia clustering around the plaques. Furthermore, long-term potentiation is impaired in 5XFAD;Abi3 knockout (“Abi3^−/−”) mice. Moreover, we identified marked changes in the proportion of microglia subpopulations in Abi3^−/− mice using a single-cell RNA sequencing approach. Mechanistic studies demonstrate that Abi3 knockdown in microglia impairs migration and phagocytosis. Together, our study provides the first in vivo functional evidence that loss of ABI3 function may increase the risk of developing AD by affecting Aβ accumulation and neuroinflammation.