A central issue in the pathogenesis of Alzheimer's disease (AD) is the relationship between amyloid deposition and neurofibrillary tangle formation. To determine whether amyloid fibril formation affects the phosphorylation state of tau, primary cultures of fetal rat hippocampal and human cortical neurons were treated with beta-amyloid (beta A) in a soluble, amorphous-aggregated, or fibrillar form. Fibrillar beta A, but not soluble or amorphous-aggregated beta A, markedly induces the phosphorylation of tau at Ser-202 and Ser-396/Ser-404, resulting in a shift in the tau M(r) in human cortical neurons. Hyperphosphorylated tau accumulates in the somatodendritic compartment of fibrillar beta A-treated neurons in a soluble form that is not associated with microtubules and is incapable of binding to microtubules in vitro. Dephosphorylation of beta A-induced tau restores its capacity to bind to microtubules. Thus, amyloid fibril formation alters the phosphorylation state of tau, resulting in the loss of microtubule binding capacity and somatodendritic accumulation, properties also exhibited by tau in the AD brain. Amyloid fibril formation may therefore be a cause of abnormal tau phosphorylation in AD.