The discovery that mutations within the tau gene lead to frontotemporal dementia with Parkinsonism linked to chromosome 17 (FTDP-17) provided direct evidence that tau alterations can lead to neurodegenerative disease. While the presence of tau fibrils and tangles is a common feature of all tauopathies, including Alzheimer's disease (AD), data are emerging from biochemical, cell-based and transgenic mouse studies which suggest that a pre-fibrillar form of pathological tau may play a key role in eliciting central nervous system neurodegeneration and behavioral impairments. Herein we review recent findings that implicate diffusible tau pathology in the onset of neurodegeneration, and discuss the implications of these findings as they relate to tau tangles and possible therapeutic strategies for the treatment of AD and related tauopathies.