Microglial phagocytosis and clearance are important for the removal of amyloid-β (Aβ) plaques in Alzheimer’s disease (AD) patients. Chronic exposure to Aβ plaques in microglia leads to microglial metabolic dysfunction, and dysregulation of microglia can accelerate the deposition of Aβ plaques and cause learning and memory impairment in AD. Therefore, regulating microglial activity in Aβ clearance is crucial for the development of therapeutics associated with AD-related dementia. We identified that Down syndrome critical region 1 (DSCR1) deficiency ameliorated Aβ plaque deposition in the 5xFAD mouse model of AD by altering microglial activity; however, the Aβ synthesis pathway was not affected. DSCR1 deficiency improves spatial learning and memory impairments in 5xFAD mice. Furthermore, DSCR1-deficient microglia accelerated lysosomal degradation of Aβ after phagocytosis, and BV2 cells with stable knockdown of DSCR1 enhanced lysosomal activity. RNA sequencing analysis showed that the transcriptional signatures associated with responses to IFN-γ were significantly upregulated in DSCR1-knockdown BV2 cells with Aβ treatment. Our data strongly suggest that DSCR1 is a critical mediator of microglial degradation of amyloid plaques and a new potential microglial therapeutic target in AD.