Microglia play a pivotal role in neurodegenerative disease pathogenesis, but the mechanisms underlying microglia dysfunction and toxicity remain to be elucidated. To investigate the effect of neurodegenerative disease-linked genes on the intrinsic properties of microglia, we studied microglia-like cells derived from human induced pluripotent stem cells (iPSCs), termed iMGs, harboring mutations in profilin-1 (PFN1) that are causative for amyotrophic lateral sclerosis (ALS). ALS-PFN1 iMGs exhibited evidence of lipid dysmetabolism, autophagy dysregulation and deficient phagocytosis, a canonical microglia function. Mutant PFN1 also displayed enhanced binding affinity for PI3P, a critical signaling molecule involved in autophagic and endocytic processing. Our cumulative data implicate a gain-of-toxic function for mutant PFN1 within the autophagic and endo-lysosomal pathways, as administration of rapamycin rescued phagocytic dysfunction in ALS-PFN1 iMGs. These outcomes demonstrate the utility of iMGs for neurodegenerative disease research and implicate microglial vesicular degradation pathways in the pathogenesis of these disorders.