Microglia, the main phagocytes of the central nervous system (CNS), are involved in the surveillance and maintenance of nervous tissue. During normal tissue homeostasis, microglia migrate within the CNS, phagocytose dead cells and tissue debris, and modulate synapse pruning and spine formation via controlled phagocytosis. In the event of an invasion by a foreign body, microglia are able to phagocytose the invading pathogen and process it proteolytically for antigen presentation. Internalized substrates are incorporated and sorted within the endocytic pathway and thereafter transported via complex vesicular routes. When targeted for degradation, substrates are delivered to acidic late endosomes and lysosomes. In these, the enzymatic degradation relies on pH and enzyme content. Endocytosis, sorting, transport, compartment acidification and degradation are regulated by complex signaling mechanisms, and these may be altered during aging and pathology. In this review, we discuss the endocytic pathway in microglia, with insight into the mechanisms controlling lysosomal biogenesis and pH regulation. We also discuss microglial lysosome function associated with Alzheimer’s disease (AD) and the mechanisms of amyloid-beta (Aβ) internalization and degradation. Finally, we explore some therapies currently being investigated to treat AD and their effects on microglial response to Aβ, with insight in those involving enhancement of lysosomal function.