Frontotemporal lobar degeneration (FTLD) has been associated with toxic intracellular aggregates of hyperphosphorylated tau (FTLD-tau). Moreover, genetic studies identified mutations in the MAPT gene encoding tau in familial cases of the disease. In this review, we cover a range of aspects of tau function, both in the healthy and diseased brain, discussing several in vitro and in vivo models. Tau structure and function in the healthy brain is presented, accentuating its distinct compartmentalization in neurons and its role in microtubule stabilization and axonal transport. Furthermore, tau-driven pathology is discussed, introducing current concepts and the underlying experimental evidence. Different aspects of pathological tau phosphorylation, the protein's genomic and domain organization as well as its spreading in disease, together with MAPT-associated mutations and their respective models are presented. Dysfunction related to other post-transcriptional modifications and their effect on normal neuronal functions such as cell cycle, epigenetics and synapse dynamics are also discussed, providing a mechanistic explanation for the observations made in FTLD-tau cases, with the possibility for therapeutic intervention.