Microglial diversity arises from the interplay between inherent genetic programs and external environmental signals. However, the mechanisms by which these processes develop and interact within the growing brain are not yet fully understood. Here, we show that radial glia-expressed integrin beta 8 (ITGB8) activates microglia-expressed TGFβ1 to drive microglial development. Domain-restricted deletion of Itgb8 in these progenitors results in regionally restricted and developmentally arrested microglia that persist into adulthood. In the absence of autocrine TGFβ1 signaling, microglia adopt a similar phenotype, leading to neuromotor symptoms almost identical to Itgb8 mutant mice. In contrast, microglia lacking the canonical TGFβ signal transducers Smad2 and Smad3 have a less polarized dysmature phenotype and correspondingly less severe neuromotor dysfunction. Our study describes the spatio-temporal regulation of TGFβ activation and signaling in the brain necessary to promote microglial development, and provides evidence for the adoption of microglial developmental signaling pathways in brain injury or disease.