The presence of lower molecular weight species comprising the C-terminal region of TAR DNA-binding protein 43 (TDP-43) is a characteristic of TDP-43 proteinopathy in amyotrophic lateral sclerosis (ALS) and frontotemporal lobar degeneration (FTLD). Here, we have identified a novel splice variant of TDP-43 that is upregulated in ALS and generates a 35-kDa N-terminally truncated species through use of an alternate translation initiation codon (ATG(Met85)), denoted here as Met(85)-TDP-35. Met(85)-TDP-35 expressed ectopically in human neuroblastoma cells exhibited reduced solubility, cytoplasmic distribution, and aggregation. Furthermore, Met(85)-TDP-35 sequestered full-length TDP-43 from the nucleus to form cytoplasmic aggregates. Expression of Met(85)-TDP-35 in primary motor neurons resulted in the formation of Met(85)-TDP-35-positive cytoplasmic aggregates and motor neuron death. A neo-epitope antibody specific for Met(85)-TDP-35 labeled the 35-kDa lower molecular weight species on immunoblots of urea-soluble extracts from ALS-FTLD disease-affected tissues and co-labeled TDP-43-positive inclusions in ALS spinal cord sections, confirming the physiological relevance of this species. These results show that the 35-kDa low molecular weight species in ALS-FTLD can be generated from an abnormal splicing event and use of a downstream initiation codon and may represent a mechanism by which TDP-43 elicits its pathogenicity.