A minor haplotype of the 10q26 locus conveys the strongest genetic risk for age-related macular degeneration (AMD). Here, we examined the mechanisms underlying this susceptibility. We found that monocytes from homozygous carriers of the 10q26 AMD-risk haplotype expressed high amounts of the serine peptidase HTRA1, and HTRA1 located to mononuclear phagocytes (MPs) in eyes of non-carriers with AMD. HTRA1 induced the persistence of monocytes in the subretinal space and exacerbated pathogenic inflammation by hydrolyzing thrombospondin 1 (TSP1), which separated the two CD47-binding sites within TSP1 that are necessary for efficient CD47 activation. This HTRA1-induced inhibition of CD47 signaling induced the expression of pro-inflammatory osteopontin (OPN). OPN expression increased in early monocyte-derived macrophages in 10q26 risk carriers. In models of subretinal inflammation and AMD, OPN deletion or pharmacological inhibition reversed HTRA1-induced pathogenic MP persistence. Our findings argue for the therapeutic potential of CD47 agonists and OPN inhibitors for the treatment of AMD.