To understand how neural-immune-associated genes and pathways contribute to neurodegenerative disease pathophysiology, we performed a systematic functional genomic analysis in purified microglia and bulk tissue from mouse and human AD, FTD, and PSP. We uncover a complex temporal trajectory of microglial-immune pathways involving the type 1 interferon response associated with tau pathology in the early stages, followed by later signatures of partial immune suppression and, subsequently, the type 2 interferon response. We find that genetic risk for dementias shows disease-specific patterns of pathway enrichment. We identify drivers of two gene co-expression modules conserved from mouse to human, representing competing arms of microglial-immune activation (NAct) and suppression (NSupp) in neurodegeneration. We validate our findings by using chemogenetics, experimental perturbation data, and single-cell sequencing in post-mortem brains. Our results refine the understanding of stage- and disease-specific microglial responses, implicate microglial viral defense pathways in dementia pathophysiology, and highlight therapeutic windows.