The central nervous system contains several populations of mononuclear phagocytes. Principal amongst these are the tissue-resident microglia. These cells are considered to derive from circulating blood progenitors that colonise the developing human nervous system in the second trimester of fetal life. They first appear as amoeboid forms and gradually differentiate to process-bearing ‘ramified’ forms with maturation. Signals driving this transformation are known to be partly derived from astrocytes in vitro, and amoeboid microglial cells progressively ramify when co-cultured with astrocytes, mirroring the ‘differentiation’ of microglia in situ during development. In the adult, microglia occupy distinct non-overlapping territories in their ramified conformations, and are capable of ‘dedifferentiating’ to their activated amoeboid morphological states in a number of pathological circumstances. This is in keeping with the capacity of these cells for a rapid response to inflammatory cues in the CNS. The interchangeable morphological continuum of these cells supports the view that microglia represent a single heterogeneous population of resident mononuclear phagocytes capable of marked plasticity. This review will discuss signals that drive the colonisation, differentiation and ramification of microglia, and examines hypothetical models for their spatial distribution in the adult nervous system.