Formation of neurofibrillary tangles (NFTs) is a common neuropathological feature found in several neurodegenerative diseases, including Alzheimer's disease. We have developed a transgenic (Tg) mouse expressing mutant human tau (V337M), derived from frontotemporal dementia parkinsonism-17. V337M Tg mice revealed tau aggregations in the hippocampus, which fulfills the histological criteria for NFTs in human neurodegenerative diseases. Concurrent with the accumulation of RNA and phosphorylated tau, neurons exhibited morphological characteristics of degenerating neurons, which include a loss of microtubules, accumulation of ribosomes, plasma and nuclear membrane ruffling, and swelling of the Golgi network. Thus, mutant tau induces neuronal degeneration associated with the accumulation of RNA and phosphorylated tau. The functional consequences of this neuronal degeneration was evidenced by the reduction of hippocampal neural activity and behavioral abnormality in Tg mice.