Microglia play essential yet poorly understood roles in brain development, including axon guidance, regulation of neurogenesis, and pruning of neuronal projections. Congenital hydrocephalus (CH), characterized by enlarged cerebrospinal fluid (CSF)-filled ventricles, is a leading cause of pediatric brain surgery, but its molecular mechanisms remain unclear. We have identified novel, recurrent, damaging missense variants in the SH3-binding domain of the adaptor protein Growth Factor Receptor-Bound Protein 2 (GRB2) in unrelated patients with CH. GRB2 is significantly co-expressed with one of its known upstream receptor tyrosine kinase partners, CSF1R, in the developing human brain, particularly in a microglial subtype associated with regulation of neural stem cells. Immunoprecipitation validated GRB2-CSF1R binding in mouse microglial cells and human monocytes. Cx3Cr1-Grb2fl/fl mice engineered with conditional deletion of Grb2 in microglia exhibit congenital absence of microglia and early postnatal severe communicating (non-obstructive) hydrocephalus, mimicking GRB2-mutant patients. The severe ventriculomegaly of Cx3Cr1-Grb2fl/fl mice is associated with both depletion of cerebral cortical neurons and impairment of glia-lymphatic-mediated CSF flow. Together, these findings implicate a novel role of GRB2 in microglia that could be essential for brain development and CSF homeostasis.