Studies during the last two decades have provided new insights into the molecular mechanism of Alzheimer's disease (AD). One of the milestone findings in AD research was the demonstration that neurofibrillary degeneration characterized by tau pathology is central to the pathogenesis of AD and other tauopathies and that abnormal hyperphosphorylation of tau is pivotal to neurofibrillary degeneration. This article reviews the recent research advances in tau pathology and the underlying dysregulation of the protein phosphorylation/dephosphorylation system. An updated model of the mechanism of neurofibrillary degeneration is also presented, and a promising therapeutic target to treat AD by correcting dysregulation of protein phosphorylation/dephosphorylation is discussed.