Abstract: Alzheimer's disease (AD) is the most common form of dementia and the sixth leading cause of death in the United States. Despite extensive research on AD pathogenesis, no effective treatment to cure AD or prevent its progression due to unclear mechanism. ABCA7 is an ATP-binding cassette (ABC) transporter sub-family A member that regulates the distribution of lipids and other lipophilic molecules across cellular membranes. Several loss-of-function variants in the ABCA7 gene are genetically associated the early-onset and late-onset AD. However, the pathogenic mechanism caused by ABCA7 loss of function remains elusive. We generated isogenic ABCA7 knockout iPSCs using CRISPR)/Cas9 technology as an ABCA7 loss of function model. We differentiated the iPSCs into microglia-like cells (iMGLs), and comprehensively assessed functions of ABCA7 knockout iMGLs using RT-qPCR, western blotting, immunofluorescent staining, and scRNA-seq. We also co-cultured the iMGLs with iPSC-derived neurons to investigate effect of ABCA7 deficiency in iMGLs on synaptic functions using microelectrode array (MEA). The scRNA-seq identified seven clusters, including human leukocyte antigen (HLA), homeostatic microglia (HM), and disease-associated microglia (DAM). Geno ontology (GO) analyses identified pathways related to lipid biosynthetic process and antigen processing and presentation pathways in ABCA7 knockout iMGLs compared to the controls. RT-qPCR showed that ABCA7 deficiency diminished the LPS-induced increases of IL6 and IL1B expression in iMGLs. We also found less immunopositivity of microglia activation markers CD68 and gelectin-3 in ABCA7 knockout iMGLs than the controls after Aß exposure. Western blotting found the compromised expressions of RAB5A and EEA1. MEA analysis revealed that ABCA7 knockout iMGLs repressed spike frequency in the neurons compared to the control iMGLs. We demonstrated that ABCA7 loss of function compromises proper immune activation in iMGLs. These findings should provide novel mechanistic insight into how the loss of ABCA7 function impacts the AD pathogenesis.