Progranulin (PGRN) is implicated in Alzheimer's disease (AD) as well as frontotemporal lobar degeneration. Genetic studies demonstrate an association of the common GRN rs5848 variant that results in reduced PGRN levels with increased risk for AD. However, the mechanisms by which PGRN reduction from the GRN AD risk variant or mutation exacerbates AD pathophysiology remain ill defined. Here, we show that the GRN AD risk variant has no significant effects on florbetapir positron emission tomographic amyloid imaging and cerebrospinal fluid (CSF) A beta levels, whereas it is associated with increased CSF tau levels in human subjects of the Alzheimer's disease neuroimaging initiative studies. Consistent with the human data, subsequent analyses using the APPswe/PS1.E9 (APP/PS1) mouse model of cerebral amyloidosis show that PGRN deficiency has no exacerbating effects on A beta pathology. In contrast and unexpectedly, PGRN deficiency significantly reduces diffuse A beta plaque growth in these APP/PS1 mice. This protective effect is due, at least in part, to enhanced microglial A beta phagocytosis caused by PGRN deficiency-induced expression of TYROBP network genes (TNG) including an AD risk factor Trem2. PGRN-deficient APP/PS1 mice also exhibit less severe axonal dystrophy and partially improved behavior phenotypes. While PGRN deficiency reduces these amyloidosis-related phenotypes, other neuronal injury mechanisms are increased by loss of PGRN, revealing a multidimensional interaction of GRN with AD. For example, C1q complement deposition at synapses is enhanced in APP/PS1 mice lacking PGRN. Moreover, PGRN deficiency increases tau AT8 and AT180 pathologies in human P301L tau-expressing mice. These human and rodent data suggest that global PGRN reduction induces microglial TNG expression and increases AD risk by exacerbating neuronal injury and tau pathology, rather than by accelerating A beta pathology.