Age-related macular degeneration (AMD) is a leading cause of vision loss affecting tens of millions of elderly worldwide. Early AMD is characterized by the appearance of soft drusen, as well as pigmentary changes in the retinal pigment epithelium (RPE). These soft, confluent drusen can progress into two forms of advanced AMD: geographic atrophy (GA, or dry AMD) or choroidal neovascularization (CNV, or wet AMD). Both forms of AMD result in a similar clinical progression in terms of loss of central vision. The exact mechanism for developing early AMD, as well as triggers responsible for progressing to advanced stage of disease, is still largely unknown. However, significant evidence exists demonstrating a complex interplay of genetic and environmental factors as causes of AMD progression. Multiple genes and/or single nucleotide polymorphisms (SNPs) have been found associated with AMD, including various genes involved in the complement pathway, lipid metabolism and extracellular matrix (ECM) remodeling. Of the known genetic contributors to disease risk, the CFH Y402H and HTRA1/ARMS polymorphisms contribute to more than 50% of the genetic risk for AMD. Environmentally, oxidative stress plays a critical role in many aging diseases including cardiovascular disease, cancer, Alzheimer's disease and AMD. Due to the exposure to sunlight and high oxygen concentration, the oxidative stress burden is higher in the eye than other tissues, which can be further complicated by additional oxidative stressors such as smoking. Increasingly, evidence is accumulating suggesting that functional abnormalities of the innate immune system incurred via high risk genotypes may be contributing to the pathogenesis of AMD by altering the inflammatory homeostasis in the eye, specifically in the handling of oxidation products. As the eye in non-pathological instances maintains a low level of inflammation despite the presence of a relative abundance of potentially inflammatory molecules, we have previously hypothesized that the tight homeostatic control of inflammation via the innate immune system is likely critical for avoidance of disease progression. However, the presence of a multitude of potential triggers of inflammation results in a sensitive balance in which perturbations thereof would subsequently alter the inflammatory state of the retina, leading to a state of chronic inflammation and pathologic progression. In this review, we will highlight the background literature surrounding the known genetic and environmental contributors to AMD risk, as well as a discussion of the potential mechanistic interplay of these factors that lead to disease pathogenesis with particular emphasis on the delicate control of inflammatory homeostasis and the centrality of the innate immune system in this process.