Microglia, the resident immune cells of the brain, have important roles in brain health. However, little is known about the regulation and consequences of microglial activation in the aging human brain. We assessed the effect of microglial activation in the aging human brain by calculating the proportion of activated microglia (PAM), based on morphologically defined stages of activation in four regions sampled postmortem from up to 225 elderly individuals. We found that cortical and not subcortical PAM measures were strongly associated with {beta}-amyloid, tau-related neuropathology, and rates of cognitive decline. Effect sizes for PAM measures are substantial, comparable to that of APOE {varepsilon}4, the strongest genetic risk factor for Alzheimers disease. Mediation modeling suggests that PAM accelerates accumulation of tau pathology leading to cognitive decline, supporting an upstream role for microglial activation in Alzheimers disease. Genome-wide analyses identified a common variant (rs2997325) influencing cortical PAM that also affected in vivo microglial activation measured by positron emission tomography using [11C]-PBR28 in an independent cohort. Finally, we identify overlaps of PAMs genetic architecture with those of Alzheimers disease, educational attainment, and several other traits.