Microglia become increasingly dysfunctional with aging and contribute to the onset of neurodegenerative disease (NDs) through defective phagocytosis, attenuated cholesterol efflux, and excessive secretion of pro-inflammatory cytokines. Dysfunctional microglia also accumulate lipid droplets (LDs); however, the mechanism underlying increased LD load is unknown. We have previously shown that microglia lacking lipoprotein lipase (LPL KD) are polarized to a pro-inflammatory state and have impaired lipid uptake and reduced fatty acid oxidation (FAO). Here, we also show that LPL KD microglia show excessive accumulation of LD-like structures. Moreover, LPL KD microglia display a pro-inflammatory lipidomic profile, increased cholesterol ester (CE) content, and reduced cholesterol efflux at baseline. We also show reduced expression of genes within the canonical cholesterol efflux pathway. Importantly, PPAR agonists (rosiglitazone and bezafibrate) rescued the LD-associated phenotype in LPL KD microglia. These data suggest that microglial-LPL is associated with lipid uptake, which may drive PPAR signaling and cholesterol efflux to prevent inflammatory lipid distribution and LD accumulation. Moreover, PPAR agonists can reverse LD accumulation, and therefore may be beneficial in aging and in the treatment of NDs.