Neuraminidase 1 (NEU1) cleaves terminal sialic acids from sialoglycoproteins in endolysosomes and at the plasma membrane. As such, NEU1 regulates immune cells, primarily those of the monocytic lineage. Here we examined how Neu1 influences microglia by modulating the sialylation of full-length Trem2 (Trem2-FL), a multifunctional receptor that regulates microglial survival, phagocytosis, and cytokine production. When Neu1 was deficient/downregulated, Trem2-FL remained sialylated, accumulated intracellularly, and was excessively cleaved into a C-terminal fragment (Trem2-CTF) and an extracellular soluble domain (sTrem2), enhancing their signaling capacities. Sialylated Trem2-FL (Sia-Trem2-FL) did not hinder Trem2-FL-DAP12-Syk complex assembly but impaired signal transduction through Syk, ultimately abolishing Trem2-dependent phagocytosis. Concurrently, Trem2-CTF-DAP12 complexes dampened NFkB signaling, while sTrem2 propagated Akt-dependent cell survival and NFAT1 mediated production of TNFa and CCL3. Because NEU1 and Trem2 are implicated in neurodegenerative/neuroinflammatory diseases, including Alzheimer disease (AD) and sialidosis, modulating NEU1 activity represents a therapeutic approach to broadly regulate microglia-mediated neuroinflammation.