Neuroinflammation is an inflammatory cascade involved in various neurological disorders, including Alzheimer's disease, multiple sclerosis, and other relevant diseases. The triggering receptor expressed on myeloid cells 2 (TREM2) is a transmembrane immune receptor that is primarily expressed by microglia in the central nervous system (CNS). While TREM2 is initially believed to be an anti-inflammatory factor in the CNS, increasing evidence suggests that TREM2 plays a more complex role in balancing neuroinflammation. However, the exact mechanism remains unclear. Notably, TREM2 directly regulates microglia inflammation through various signaling pathways. Additionally, studies have suggested that TREM2 mediates microglial phagocytosis, autophagy, metabolism, and microglia phenotypes, which may be involved in the modulation of neuroinflammation. In this review, we aim to discuss the critical role of TREM2 in several microglia functions and the underlying molecular mechanism the modulatory which further mediate neuroinflammation, and elaborate. Finally, we discuss the potential of TREM2 as a therapeutic target in neuroinflammatory disorders.