Microglia play important roles in shaping the developing CNS, and at early stages they have been proposed to regulate progenitor proliferation, differentiation, and neuronal survival. However, these studies reveal contradictory outcomes, highlighting the complexity of these cell-cell interactions. Here, we investigate microglia function during embryonic mouse retina development, where only microglia, progenitors, and neurons are present. In both sexes, we determine that microglia primarily interact with retinal neurons and find that depletion of microglia via conditional KO of the Csf1 receptor results in increased density of retinal ganglion cells (RGCs). Pharmacological inhibition of microglia also results in an increase in RGCs, with no effect on retinal progenitor proliferation, RGC genesis, or apoptosis. We show that microglia in the embryonic retina are enriched for phagocytic markers and observe engulfment of nonapoptotic Brn3-labeled RGCs. We investigate the molecular pathways that can mediate cell engulfment by microglia and find selective downregulation of complement pathway components with microglia inhibition, and further show that C1q protein marks a subset of RGCs in the embryonic retina. KO of complement receptor 3 (CR3; Itgam), which is only expressed by microglia, results in increased RGC density, similar to what we observed after depletion or inhibition of microglia. Thus, our data suggest that microglia regulate neuron elimination in the embryonic mouse retina by complement-mediated phagocytosis of non-apoptotic newborn RGCs.