Several neurodegenerative diseases are influenced by the innate immune response in the central nervous system (CNS). Microglia have proinflammatory and subsequently neurotoxic actions as well as anti‐inflammatory functions that promote recovery and repair. Very little is known about the transcriptional control of these specific microglial behaviors. We have previously shown that in HIV‐associated neurocognitive disorders (HAND), the transcription factor p53 accumulates in microglia and that microglial p53 expression is required for the in vitro neurotoxicity of the HIV coat glycoprotein gp120. These findings suggested a novel function for p53 in regulating microglial activation. Here, we report that in the absence of p53, microglia demonstrate a blunted response to interferon‐γ, failing to increase expression of genes associated with classical macrophage activation or secrete proinflammatory cytokines. Microarray analysis of global gene expression profiles revealed increased expression of genes associated with anti‐inflammatory functions, phagocytosis, and tissue repair in p53 knockout (p53^−/−) microglia compared with those cultured from strain matched p53 expressing (p53^+/+) mice. We further observed that p53^−/− microglia demonstrate increased phagocytic activity in vitro and expression of markers for alternative macrophage activation both in vitro and in vivo. In HAND brain tissue, the alternative activation marker CD163 was expressed in a separate subset of microglia than those demonstrating p53 accumulation. These data suggest that p53 influences microglial behavior, supporting the adoption of a proinflammatory phenotype, while p53 deficiency promotes phagocytosis and gene expression associated with alternative activation and anti‐inflammatory functions. © 2011 Wiley‐Liss, Inc.