Aging-associated loss of chromatin compaction is linked to derepression of retrotransposable elements (RTEs) in mouse and human tissues. Whether such RTE transcription contributes to the microglia activation that is common in aged brains is unknown. Here, we show that DAXX, a histone chaperone and RTE repressor, is downregulated during aging, preserves microglia homeostasis and inhibits cellular senescence. Loss of Daxx in young-adult microglia drives a reactive phenotype marked by chromatin decompaction at RTEs, loss of homeostatic markers, cell cycle re-entry and behavioral changes. This state leads to DNA damage and microglial depletion, followed by replacement with DAXX-deficient/Apoehigh microglia displaying features of senescence. Sustained induction of senescence relies on promyelocytic leukemia protein, a DAXX-interacting factor and interferon target. Together, these findings highlight the importance of heterochromatin maintenance in preserving adult microglial identity and plasticity, with broader implications for brain homeostasis, healthy aging and behavior.