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Abstract Background Alzheimer’s disease (AD) is the most common neurodegenerative disease and type 2 diabetes (T2D) plays an important role in conferring the risk for AD. Although AD and T2D share common features, the common molecular mechanisms underlying these two diseases remain elusive. Methods Mice with different AD- and/or tauopathy-linked genetic backgrounds (APPswe/PS1dE9, Tau P301L and APPswe/PS1dE9/Tau P301L) were fed for 6 months with standard diet or typical Western diet (TWD). After behavioral and metabolic assessments of the mice, the effects of TWD on global gene expression as well as dystrophic neurite and microglia pathology were elucidated. Consequently, mechanistic aspects related to autophagy, cell survival, phagocytic uptake as well as Trem2/Dap12 signaling pathway, were assessed in microglia upon modulation of PI3K-Akt signaling. To evaluate whether the mouse model-derived results translate to human patients, the effects of diabetic phenotype on microglial pathology were assessed in cortical biopsies of idiopathic normal pressure hydrocephalus (iNPH) patients encompassing β-amyloid pathology. Results TWD led to obesity and diabetic phenotype in all mice regardless of the genetic background. TWD also exacerbated memory and learning impairment in APPswe/PS1dE9 and Tau P301L mice. Gene co-expression network analysis revealed impaired microglial responses to AD-related pathologies in APPswe/PS1dE9 and APPswe/PS1dE9/Tau P301L mice upon TWD, pointing specifically towards aberrant microglial functionality due to altered downstream signaling of Trem2 and PI3K-Akt. Accordingly, fewer microglia, which did not show morphological changes, and increased number of dystrophic neurites around β-amyloid plaques were discovered in the hippocampus of TWD mice. Mechanistic studies in mouse microglia revealed that interference of PI3K-Akt signaling significantly decreased phagocytic uptake and proinflammatory response. Moreover, increased activity of Syk-kinase upon ligand-induced activation of Trem2/Dap12 signaling was detected. Finally, characterization of microglial pathology in cortical biopsies of iNPH patients revealed a significant decrease in the number of microglia per β-amyloid plaque in obese individuals with concomitant T2D as compared to both normal weight and obese individuals without T2D. Conclusions Collectively, these results suggest that diabetic phenotype in mice and humans mechanistically associates with abnormally reduced microglial responses to β-amyloid pathology and further suggest that AD and T2D share overlapping pathomechanisms, likely involving altered immune function in the brain.