Although genetics highlights the role of microglia in Alzheimer’s disease, one-third of putative Alzheimer’s disease risk genes lack adequate mouse orthologs. Here we successfully engraft human microglia derived from embryonic stem cells in the mouse brain. The cells recapitulate transcriptionally human primary microglia ex vivo and show expression of human-specific Alzheimer’s disease risk genes. Oligomeric amyloid-β induces a divergent response in human versus mouse microglia. This model can be used to study the role of microglia in neurological diseases. Human stem cell-derived microglia integrate into mouse brain, displaying transcriptome signatures of microglia directly isolated from human brain and providing a chimeric model to study human-specific aspects of Alzheimer’s disease and other brain diseases.