Alzheimer's disease (AD) is the world's most common dementing illness, affecting over 150 million patients. Classically AD has been viewed as a neurodegenerative disease of the elderly, characterized by the extracellular deposition of misfolded amyloid-β (Aβ) peptide and the intracellular formation of neurofibrillary tangles. Only recently has neuroinflammation emerged as an important component of AD pathology. Experimental, genetic and epidemiological data now indicate a crucial role for activation of the innate immune system as a disease-promoting factor. The sustained formation and deposition of Aβ aggregates causes chronic activation of the immune system and disturbance of microglial clearance functions. Here we review advances in the molecular understanding of the inflammatory response in AD that point to novel therapeutic approaches for the treatment of this devastating disease.