While motor and cortical neurons are affected in C9orf72 amyotrophic lateral sclerosis and frontotemporal dementia (ALS/FTD), it remains largely unknown if and how non-neuronal cells induce or exacerbate neuronal damage. We differentiated C9orf72 ALS/FTD patient-derived induced pluripotent stem cells into microglia (iPSC-MG) and examined their intrinsic phenotypes. Similar to iPSC motor neurons, C9orf72 ALS/FTD iPSC-MG mono-cultures form G4C2 repeat RNA foci, exhibit reduced C9orf72 protein levels, and generate dipeptide repeat proteins. Healthy control and C9orf72 ALS/FTD iPSC-MG equally express microglial specific genes and perform microglial functions, including inflammatory cytokine release and phagocytosis of extracellular cargos, such as synthetic amyloid beta peptides and healthy human brain synaptoneurosomes. RNA sequencing analysis revealed select transcriptional changes of genes associated with neuroinflammation or neurodegeneration in diseased microglia yet no significant differentially expressed microglial-enriched genes. Moderate molecular and functional differences were observed in C9orf72 iPSC-MG mono-cultures despite the presence of C9orf72 pathological features suggesting that a diseased microenvironment may be required to induce phenotypic changes in microglial cells and the associated neuronal dysfunction seen in C9orf72 ALS/FTD neurodegeneration.