Alzheimer’s disease (AD) is the most prevalent cause of dementia, but still no effective treatment exists. Microglia have been implicated in AD pathogenesis, but their role is still matter of debate. Our study represents direct evidence that microglia play a key role in disease progression, and that replacing diseased APP/PSEN1 microglia via single systemic wild-type (WT) hematopoietic stem and progenitor cell (HSPC) transplantation rescue AD phenotype in the 5xFAD mice. Cell replacement led to complete prevention of memory loss and neurocognitive impairment, and significant decrease of β-amyloid plaques in the hippocampus and cortex. Neuroinflammation was also significantly reduced. Transcriptomic analysis revealed significant decrease in gene expression related to “disease-associated microglia” in the cortex, and “neurodegeneration-associated endothelial cells” in the hippocampus of the WT HSPC-transplanted 5xFAD mice compared to diseased controls. This work shows the importance of microglia in AD and that restoring genetically normal microglia represents a promising therapeutic avenue.