Microglia play a role in the pathogenesis of many retinal diseases. Fundus spots in mice often correlate with the accumulation of activated subretinal microglia. Here we use a semiquantitative fundus spot scoring scale in combination with an unbiased, state-of-the-science forward genetics pipeline to identify causative associations between chemically induced mutations and fundus spot phenotypes. Among several associations, we focus on a missense mutation inLipelinked to an increase in yellow fundus spots in C57BL/6J mice.Lipe−/−mice generated using CRISPR-Cas9 technology are found to develop accumulation of subretinal microglia, a retinal degeneration with decreased visual function, and an abnormal retinal lipid profile. We establish an indispensable role ofLipein retinal/RPE lipid homeostasis and retinal health. Further studies using this new model will be aimed at determining how lipid dysregulation results in the activation of subretinal microglia and whether these microglia also play a role in the subsequent retinal degeneration.