Age-related macular degeneration (AMD) is a leading cause of legal blindness in the elderly in the industrialized word. While the immune system in the retina is likely to be important in AMD pathogenesis, the cell biology underlying the disease is incompletely understood. Clinical and basic science studies have implicated alterations in the retinal pigment epithelium (RPE) layer as a locus of early change. Also, retinal microglia, the resident immune cells of the retina, have been observed to translocate from their normal position in the inner retina to accumulate in the subretinal space close to the RPE layer in AMD eyes and in animal models of AMD.In this study, we examined the effects of retinal microglia on RPE cells using 1) an in vitro model where activated retinal microglia are co-cultured with primary RPE cells, and 2) an in vivo mouse model where retinal microglia are transplanted into the subretinal space. We found that retinal microglia induced in RPE cells 1) changes in RPE structure and distribution, 2) increased expression and secretion of pro-inflammatory, chemotactic, and pro-angiogenic molecules, and 3) increased extent of in vivo choroidal neovascularization in the subretinal space.These findings share similarities with important pathological features found in AMD and suggest the relevance of microglia-RPE interactions in AMD pathogenesis. We speculate that the migration of retinal microglia into the subretinal space in early stages of the disease induces significant changes in RPE cells that perpetuate further microglial accumulation, increase inflammation in the outer retina, and fosters an environment conducive for the formation of neovascular changes responsible for much of vision loss in advanced AMD.