Tau protein in a hyperphosphorylated state makes up the intracellular inclusions of several neurodegenerative diseases, including Alzheimer's disease and cases of frontotemporal dementia. Mutations in Tau cause familial forms of frontotemporal dementia, establishing that dysfunction of tau protein is sufficient to cause neurodegeneration and dementia. Transgenic mice expressing human mutant tau in neurons exhibit the essential features of tauopathies, including neurodegeneration and abundant filaments composed of hyperphosphorylated tau. Here we show that a previously described mouse line transgenic for human P301S tau exhibits an age-related, layer-specific loss of superficial cortical neurons, similar to what has been observed in human frontotemporal dementias. We also show that focal neural precursor cell implantation, resulting in glial cell differentiation, leads to the sustained rescue of cortical neurons. Together with evidence indicating that astrocyte transplantation may be neuroprotective, our findings suggest a beneficial role for glial cell-based repair in neurodegenerative diseases.