The physiological and neurological correlates of plummeting brain osmolality during edema, traumatic CNS injury, and severe ischemia are compounded by neuroinflammation. Using multiple approaches, we investigated how retinal microglia respond to challenges mediated by increases in strain, osmotic gradients, and agonists of the stretch‐activated cation channel TRPV4. Dissociated and intact microglia were TRPV4‐immunoreactive and responded to the selective agonist GSK1016790A and substrate stretch with altered motility and elevations in intracellular calcium ([Ca2+]i). Agonist‐ and hypotonicity‐induced swelling was associated with a nonselective outwardly rectifying cation current, increased [Ca2+]i, and retraction of higher‐order processes. The antagonist HC067047 reduced the extent of hypotonicity‐induced microglial swelling and inhibited the suppressive effects of GSK1016790A and hypotonicity on microglial branching. Microglial TRPV4 signaling required intermediary activation of phospholipase A2 (PLA2), cytochrome P450, and epoxyeicosatrienoic acid production (EETs). The expression pattern of vanilloid thermoTrp genes in retinal microglia was markedly different from retinal neurons, astrocytes, and cortical microglia. These results suggest that TRPV4 represents a primary retinal microglial sensor of osmochallenges under physiological and pathological conditions. Its activation, associated with PLA2, modulates calcium signaling and cell architecture. TRPV4 inhibition might be a useful strategy to suppress microglial overactivation in the swollen and edematous CNS.