Sporadic inclusion body myositis (IBM) is the most common acquired muscle disease in adults over age 50, yet it remains unclear whether the disease is primarily driven by T cell–mediated autoimmunity. IBM muscle biopsies display nuclear clearance and cytoplasmic aggregation of TDP-43 in muscle cells, a pathologic finding observed initially in neurodegenerative diseases, where nuclear loss of TDP-43 in neurons causes aberrant RNA splicing. Here, we show that loss of TDP-43–mediated splicing repression, as determined by inclusion of cryptic exons, occurs in skeletal muscle of subjects with IBM. Of 119 muscle biopsies tested, RT-PCR–mediated detection of cryptic exon inclusion was able to diagnose IBM with 84% sensitivity and 99% specificity. To determine the role of T cells in pathogenesis, we generated a xenograft model by transplanting human IBM muscle into the hindlimb of immunodeficient mice. Xenografts from subjects with IBM displayed robust regeneration of human myofibers and recapitulated both inflammatory and degenerative features of the disease. Myofibers in IBM xenografts showed invasion by human, oligoclonal CD8+ T cells and exhibited MHC-I up-regulation, rimmed vacuoles, mitochondrial pathology, p62-positive inclusions, and nuclear clearance and cytoplasmic aggregation of TDP-43, associated with cryptic exon inclusion. Reduction of human T cells within IBM xenografts by treating mice intraperitoneally with anti-CD3 (OKT3) suppressed MHC-I up-regulation. However, rimmed vacuoles and loss of TDP-43 function persisted. These data suggest that T cell depletion does not alter muscle degenerative pathology in IBM.