Microglial cells closely interact with senile plaques in Alzheimer's disease and acquire the morphological appearance of an activated phenotype. The significance of this microglial phenotype and the impact of microglia for disease progression have remained controversial. To uncover and characterize putative changes in the functionality of microglia during Alzheimer's disease, we directly assessed microglial behavior in two mouse models of Alzheimer's disease. Using in vivo two-photon microscopy and acute brain slice preparations, we found that important microglial functions - directed process motility and phagocytic activity - were strongly impaired in mice with Alzheimer's disease-like pathology compared to age-matched non-transgenic animals. Notably, impairment of microglial function temporally and spatially correlated with Aβ plaque deposition, and phagocytic capacity of microglia could be restored by interventionally decreasing amyloid burden by Aβ vaccination. These data suggest that major microglial functions progressively decline in Alzheimer's disease with the appearance of Aβ plaques, and that this functional impairment is reversible by lowering Aβ burden, e.g. by means of Aβ vaccination.