Patients with frontotemporal dementia (FTD) resulting from granulin (GRN) haploinsufficiency have reduced levels of progranulin and exhibit dysregulation in inflammatory and lysosomal networks. Microglia produce high levels of progranulin, and reduction of progranulin in microglia alone is sufficient to recapitulate inflammation, lysosomal dysfunction, and hyperproliferation in a cell-autonomous manner. Therefore, targeting microglial dysfunction caused by progranulin insufficiency represents a potential therapeutic strategy to manage neurodegeneration in FTD. Limitations of current progranulin-enhancing strategies necessitate the discovery of new targets. To identify compounds that can reverse microglial defects in Grn-deficient mouse microglia, we performed a compound screen coupled with high throughput sequencing to assess key transcriptional changes in inflammatory and lysosomal pathways. Positive hits from this initial screen were then further narrowed down based on their ability to rescue cathepsin activity, a critical biochemical readout of lysosomal capacity. The screen identified nor-binaltorphimine dihydrochloride (nor-BNI) and dibutyryl-cAMP, sodium salt (DB-cAMP) as two phenotypic modulators of progranulin deficiency. In addition, nor-BNI and DB-cAMP also rescued cell cycle abnormalities in progranulin-deficient cells. These data highlight the potential of a transcription-based platform for drug screening, and advance two novel lead compounds for FTD.