Neurodegeneration has been shown to induce microglial activation and the infiltration of monocyte‐derived macrophages into the CNS, resulting in the coexistence of these two populations within the same lesion, though their distinct features remain elusive. To investigate the impact of rod photoreceptor degeneration on microglial activation, we generated a toxin‐mediated genetic model of rod degeneration. Rod injury induced microglial proliferation and migration toward the photoreceptors. Bone marrow transplantation revealed the invasion of monocyte‐derived macrophages into the retina, with microglia and the infiltrating macrophages showing distinct distribution patterns in the retina. By comparing the gene expression profiles of the activated microglia and infiltrating macrophages, we identified microglia‐specific genes, including Ak1, Ctsf, Sall1, Phlda3, and Spns2. An analysis of Sall1gfp knock‐in mice showed GFP expression in the microglia of developing and mature healthy retinas. DTA injury induced the expansion of Sall1gfp⁺ microglia, whereas Ly6C⁺ monocyte‐derived macrophages were mostly Sall1gfp^‐, supporting the idea that Sall1 is exclusively expressed in microglia within the retinal phagocyte pool. We evaluated the contribution of microglia to the phagocyte pool in rd1 mutant retinas and found that Sall1gfp⁺ microglia constituted the majority of phagocytes. A Sall1 deficiency did not affect microglial colonization of the retina and the cortex, but it did change their morphology from a ramified to a more amoeboid appearance. The morphological defects observed in Sall1‐deficient microglia were not rescued by the presence of wild‐type non‐microglial cells, suggesting that Sall1 functions cell‐autonomously in microglia. Taken together, our data indicate that Sall1 regulates microglial morphology during development. GLIA 2016;64:2005–2024