Microglia are the resident macrophages of the central nervous system (CNS). As such, they are the main phagocytes and key triggers of inflammation in the CNS. As summarised in Figure 1, the phagocytic capacity of microglia is strongly influenced by their activation state. In neuroinflammation, chronically activated “M1” microglia lose their ability to efficiently clear damaging proteins and debris, leading to further tissue damage. Therefore, drugs that restore normal microglial phagocytosis in a pro-inflammatory environment are attractive therapeutic candidates for neurodegenerative diseases, most of which possess a strong neuroinflammatory component. Here, we demonstrate that human iPSC-derived microglia accurately model altered phagocytic responses induced by pro- and anti-inflammatory stimuli and can reveal the potential of new drugs to enhance or restore normal microglial phagocytosis.