Interest in the microtubule-associated protein tau stems from its critical roles in neural development and maintenance, as well as its role in Alzheimer's, FTDP-17 and related neurodegenerative diseases. Under normal circumstances, tau performs its functions by binding to microtubules and powerfully regulating their stability and growing and shortening dynamics. On the other hand, genetic analyses have established a clear cause-and-effect relationship between tau dysfunction/mis-regulation and neuronal cell death and dementia in FTDP-17, but the molecular basis of tau's destructive action(s) remains poorly understood. One attractive model suggests that the intracellular accumulation of abnormal tau aggregates causes cell death, i.e., a gain-of-toxic function model. Here, we describe the evidence and arguments for an alternative loss-of-function model in which tau-mediated neuronal cell death is caused by the inability of affected cells to properly regulate their microtubule dynamic due to mis-regulation by tau. In support of this model, our recent data demonstrate that missense FTDP-17 mutations that alter amino acid residues near tau's microtubule binding region strikingly modify the ability of tau to modulate microtubule dynamics. Additional recent data from our labs support the notion that the same dysfunction occurs in the FTDP-17 regulatory mutations that alter tau RNA splicing patterns. Our model posits that the dynamics of microtubules in neuronal cells must be tightly regulated to enable them to carry out their diverse functions, and that microtubules that are either over-stabilized or under-stabilized, that is, outside an acceptable window of dynamic activity, lead to neurodegeneration. An especially attractive aspect of this model is that it readily accommodates both the structural and regulatory classes of FTDP-17 mutations.