The most characteristic cellular change in Alzheimer's disease is the accumulation of aberrant filaments, the paired helical filaments (PHF), in the affected neurons. There is growing evidence from a number of laboratories that dementia correlates better with the accumulation of PHF than of the extracellular amyloid, the second major lesion of Alzheimer's disease. PHF are both morphologically and biochemically unlike any of the normal neurofibrils. The major polypeptides in isolated PHF are microtubule-associated protein tau. Tau in PHF is phosphorylated differently from tau in microtubules. This abnormal phosphorylation of tau in PHF occurs at several sites. The accumulation of abnormally phosphorylated tau in the affected neurons in Alzheimer's disease brain precedes both the formation and the ubiquitination of the neurofibrillary tangles. In Alzheimer's disease brain, tubulin is assembly competent, but the in vitro assembly of microtubules is not observed. In vitro, the phosphate groups in PHF are less accessible than those of tau to alkaline phosphatase. The in vitro dephosphorylated PHF polypeptides stimulate microtubule assembly from bovine tubulin. It is hypothesized that a defect in the protein phosphorylation/dephosphorylation system is one of the earliest events in the cytoskeletal pathology in Alzheimer's disease. Production of nonfunctional tau by its phosphorylation and its polymerization into PHF most probably contributes to a microtubule assembly defect, and consequently, to a compromise in both axoplasmic flow and neuronal function. Index Entries: Alzheimer's disease; mechanisms of neuronal degeneration; neurofibrillary changes; paired helical filaments: biochemistry; microtubule-associated protein tau; abnormal phosphorylation; ubiquitination; microtubule assembly; axoplasmic flow; protein phosphorylation/dephosphorylation.