ABSTRACT: Adult-onset leukoencephalopathy with axonal spheroids and pigmented glia (ALSP) is a neurodegenerative disorder resulting from genetic alterations in CSF1R, a gene expressed by microglia. We studied an elderly man with a hereditary progressive dementing and behavioral disorder of unclear etiology. Standard genetic testing for leukodystrophy and other neurodegenerative conditions was negative. Brain autopsy revealed classic features of ALSP, including confluent white matter degeneration with axonal spheroids and pigmented glial cells in the affected white matter. Subsequent long-read sequencing identified a novel deletion in CSF1R. To elucidate mechanisms underlying white matter degeneration in ALSP, we compared multiple brain regions exhibiting varying degrees of white matter pathology. Our analysis revealed markedly decreased CSF1R transcript levels and protein across brain regions, including intact white matter. Single nuclear RNA sequencing (snRNAseq) analysis identified two disease-associated microglial cell states: lipid-laden microglia (expressing GPNMB, ATG7, LGALS1, LGALS3) and inflammatory microglia (expressing IL2RA, ATP2C1, FCGBP, VSIR, SESN3), along with a small population of CD44+ peripheral monocyte-derived macrophages exhibiting migratory and phagocytic signatures. Disease-associated oligodendrocytes exhibited cell stress signatures and dysregulated apoptosis-related genes. Disease-associated oligodendrocyte precursor cells (OPCs) displayed a failure in their differentiation into mature myelin-forming oligodendrocytes, as evidenced by upregulated LRP1, PDGFRA, SOX5, NFIA, and downregulated NKX2-2, NKX6.2, SOX4, SOX8, TCF7L2, YY1, ZNF488. Overall, our findings highlight microglia–oligodendroglia crosstalk in demyelination, with CSF1R dysfunction promoting phagocytic and inflammatory microglia states, resulting in oligodendrocyte depletion, an arrest in OPC differentiation, and lack of remyelination.