Triggering receptor expressed on myeloid cells 2 (TREM2) is a microglial surface receptor genetically linked to the risk for Alzheimer’s disease (AD). A proteolytic product, soluble TREM2 (sTREM2), is abundant in the cerebrospinal fluid and its levels positively correlate with neuronal injury markers. To gain insights into the pathological roles of sTREM2, we studied sTREM2 in the brain of 5xFAD mice, a model of AD, by direct stereotaxic injection of recombinant sTREM2 protein or by adeno-associated virus (AAV)-mediated expression. We found that sTREM2 reduces amyloid plaque load and rescues functional deficits of spatial memory and long-term potentiation. Importantly, sTREM2 enhances microglial proliferation, migration, clustering in the vicinity of amyloid plaques and the uptake and degradation of Aβ. Depletion of microglia abolishes the neuroprotective effects of sTREM2. Our study demonstrates a protective role of sTREM2 against amyloid pathology and related toxicity and suggests that increasing sTREM2 can be explored for AD therapy.