A rare coding variant (rs72824905, p.P522R) conferring protection against Alzheimer's disease (AD) was identified in the gene encoding the enzyme phospholipase-C-γ2 (PLCG2) that is highly expressed in microglia. To explore the protective nature of this variant, we employed latent process linear mixed models to examine the association of p.P522R with longitudinal cognitive decline in 3595 MCI patients, and in 10,097 individuals from population-based studies. Furthermore, association with CSF levels of pTau181, total tau, and Aβ1-42 was assessed in 1261 MCI patients. We found that MCI patients who carried the p.P522R variant showed a slower rate of cognitive decline compared to non-carriers and that this effect was mediated by lower pTau181 levels in CSF. The effect size of the association of p.P522R with the cognitive decline and pTau181 was similar to that of APOE-ε4, the strongest genetic risk factor for AD. Interestingly, the protective effect of p.P522R was more pronounced in MCI patients with low Aβ1-42 levels suggesting a role of PLCG2 in the response to amyloid pathology. In line with this hypothesis, we observed no protective effect of the PLCG2 variant on the cognitive decline in population-based studies probably due to the lower prevalence of amyloid positivity in these samples compared to MCI patients. Concerning the potential biological underpinnings, we identified a network of co-expressed proteins connecting PLCG2 to APOE and TREM2 using unsupervised co-regulatory network analysis. The network was highly enriched for the complement cascade and genes differentially expressed in disease-associated microglia. Our data show that p.P522R in PLCG2 reduces AD disease progression by mitigating tau pathology in the presence of amyloid pathology and, as a consequence, maintains cognitive function. Targeting the enzyme PLCG2 might provide a new therapeutic approach for treating AD.