Emerging evidence implicates impaired microglia function and dysregulation of lipid metabolism in Alzheimer's disease (AD). Oleoylethanolamide (OEA), an endogenous lipid and PPARα agonist, has been shown to promote longevity in C. elegans through regulation of lysosome-to-nucleus signaling and cellular metabolism. Using a stable OEA analog, KDS-5104, we found that OEA-PPARα signaling promotes TFEB lysosomal activity independent of mTORC1 and upregulates cell-surface receptor CD36, leading to enhanced microglial Aβ uptake and clearance. These are associated with the suppression of LPS-induced lipid droplet accumulation and inflammasome activation. Chronic treatment of the 5xFAD mice with KDS-5104 restored dysregulated profiles, reduced reactive gliosis and Aβ pathology and rescued cognitive impairments. Together, our study provides support that augmenting OEA-mediated lipid signaling may offer therapeutic benefit against aging and AD through modulating lipid metabolism and microglia phagocytosis and clearance.