Tau is a substrate of caspases, and caspase-cleaved tau has been detected in Alzheimer's disease brain but not in control brain. Furthermore, in vitro studies have revealed that caspase-cleaved tau is more fibrillogenic than full-length tau. Considering these previous findings, the purpose of this study was to determine how the caspase cleavage of tau affected tau function and aggregation in a cell model system. The effects of glycogen synthase kinase 3 beta (GSK3 beta), a well established tau kinase, on these processes also were examined. Tau or tau that had been truncated at Asp-421 to mimic caspase cleavage (Tau-D421) was transfected into cells with or without GSK3 beta, and phosphorylation, microtubule binding, and tau aggregation were examined. Tau-D421 was not as efficiently phosphorylated by GSK3 beta as full-length tau. Tau-D421 efficiently bound microtubules, and in contrast to the full-length tau, co-expression with GSK3 beta did not result in a reduction in the ability of Tau-D421 to bind microtubules. In the absence of GSK3 beta, neither Tau-D421 nor full-length tau formed Sarkosyl-insoluble inclusions. However, in the presence of GSK3 beta, Tau-D421, but not full-length tau, was present in the Sarkosyl-insoluble fraction and formed thioflavin-S-positive inclusions in the cell. Nonetheless, co-expression of GSK3 beta and Tau-D421 did not result in an enhancement of cell death. These data suggest that a combination of phosphorylation events and caspase activation contribute to the tau oligomerization process in Alzheimer's disease, with GSK3 beta-mediated tau phosphorylation preceding caspase cleavage.