Mutations in TREM2, which has been proposed to regulate the inflammatory responses and the clearance of apoptotic neurons and/or amyloid-β (Aβ), are genetically linked to increased risk for late-onset Alzheimer’s disease (AD). Interestingly, a missense variant in TREM-like transcript 2 (TREML2), a structurally similar protein encoded by the same gene cluster with TREM2 on chromosome 6, has been shown to protect against AD. However, the molecular mechanisms by which TREM2 and TREML2 regulate the pathogenesis of AD, and their functional relationship, if any, remain unclear. Here, we show that lipopolysaccharide (LPS) stimulation significantly suppressed TREM2 but increased TREML2 expression in mouse brain. Consistent with this in vivo result, LPS or oligomeric Aβ treatment down-regulated TREM2 but up-regulated TREML2 expression in primary microglia. Importantly, modulation of TREM2 or TREML2 levels had opposing effects on inflammatory responses with enhancement or suppression of LPS induced pro-inflammatory cytokine gene expression observed upon TREM2 or TREML2 down-regulation, respectively. In addition, the proliferation of primary microglia was significantly decreased when TREM2 was down-regulated, whereas it was increased upon TREML2 knockdown. Together, our results suggest that several microglial functions are strictly regulated by TREM2 and TREML2, whose dysfunctions likely contribute to AD pathogenesis by impairing brain innate immunity. Our findings provide novel mechanistic insights into the functions of TREM2 and TREML2 in microglia and have implications on designing new therapeutic strategies to treat AD.