HTRA1 proteolysis of TSP1 inhibits immune suppression in age-related macular degeneration. A minor haplotype of the 10q26 locus conveys the strongest genetic risk for age related macular degeneration (AMD), a major cause of blindness affecting millions of individuals worldwide. Here we show that monocytes (Mo) from homozygous carriers of the 10q26 AMD-risk haplotype overexpress the High-Temperature Requirement A Serine Peptidase 1 (HTRA1), which locates to mononuclear phagocytes (MP) in eyes of patients with AMD. Elevated HTRA1 led to significant subretinal Mo persistence and promoted pathogenic MP accumulation due to the hydrolysis of Thrombospondin 1 (TSP1). Mechanistically, we demonstrate that HTRA1 separates TSP1’s two CD47- binding Valine-Valine-Methionine-sites that are necessary for efficient CD47 activation and repression of osteopontin (OPN) secretion, a mediator of inflammation and wound healing. Accordingly, OPN was overexpressed in early Mo-derived macrophages in 10q26 risk carriers and OPN deletion or inhibition fully reversed HTRA1- induced pathogenic MP persistence. Our observations provide new insights into the molecular mechanisms of MP accumulation in inflammation and show that HTRA1 resistant CD47 agonists and OPN inhibitors can provide a powerful tool to reverse HTRA1’s pro-inflammatory effect and restore retinal immune suppression in AMD, critical for retinal homeostasis.