Spinocerebellar ataxia type 3, also known as Machado-Joseph disease (SCA3/MJD), is one of at least eight inherited neurodegenerative diseases caused by expansion of a polyglutamine tract in the disease protein. Here we present two lines of evidence implicating the ubiquitin-proteasome pathway in SCA3/MJD pathogenesis. First, studies of both human disease tissue and in vitro models showed redistribution of the 26S proteasome complex into polyglutamine aggregates. In neurons from SCA3/MJD brain, the proteasome localized to intranuclear inclusions containing the mutant protein, ataxin-3. In transfected cells, the proteasome redistributed into inclusions formed by three expanded polyglutamine proteins: a pathologic ataxin-3 fragment, full-length mutant ataxin-3 and an unrelated GFP-polyglutamine fusion protein. Inclusion formation by the full-length mutant ataxin-3 required nuclear localization of the protein and occurred within specific subnuclear structures recently implicated in the regulation of cell death, promyelocytic leukemia antigen oncogenic domains. In a second set of experiments, inhibitors of the proteasome caused a repeat length-dependent increase in aggregate formation, implying that the proteasome plays a direct role in suppressing polyglutamine aggregation in disease. These results support a central role for protein misfolding in the pathogenesis of SCA3/MJD and suggest that modulating proteasome activity is a potential approach to altering the progression of this and other polyglutamine diseases.