background: Progranulin (PGRN) haploinsufficiency due to progranulin gene (GRN) variants can cause frontotemporal dementia (FTD) with aberrant TAR DNA-binding protein 43 (TDP-43) accumulation. Despite microglial burden with TDP-43-related pathophysiology, direct microglial TDP-43 pathology has not been clarified yet, only emphasized in neuronal pathology. Thus, the objective of this study was to investigate TDP-43 pathology in microglia of patients with PGRN haploinsufficiency. methods: To design a human microglial cell model with PGRN haploinsufficiency, monocyte-derived microglia (iMGs) were generated from FTD-GRN patients carrying pathogenic or likely pathogenic variants (p.M1? and p.W147*) and three healthy controls. results: iMGs from FTD-GRN patients with PGRN deficiency exhibited severe neuroinflammation phenotype and failure to maintain their homeostatic molecular signatures, along with impaired phagocytosis. In FTD-GRN patients-derived iMGs, significant cytoplasmic TDP-43 aggregation and accumulation of lipid droplets with profound lysosomal abnormalities were observed. These pathomechanisms were mediated by complement C1q activation and upregulation of pro-inflammatory cytokines. conclusions: Our study provides considerable cellular and molecular evidence that loss-of-function variants of GRN in human microglia can cause microglial dysfunction with abnormal TDP-43 aggregation induced by inflammatory milieu as well as the impaired lysosome. Elucidating the role of microglial TDP-43 pathology in intensifying neuroinflammation in individuals with FTD due to PGRN deficiency and examining consequential effects on microglial dysfunction might yield novel insights into the mechanisms underlying FTD and neurodegenerative disorders.