Tauopathies, including frontotemporal dementia (FTD) and Alzheimer's disease (AD), are neurodegenerative diseases in which tau fibrils accumulate. Recent evidence supports soluble tau species as the major toxic species. How soluble tau accumulates and causes neurodegeneration remains unclear. Here we identify tau acetylation at Lys174 (K174) as an early change in AD brains and a critical determinant in tau homeostasis and toxicity in mice. The acetyl-mimicking mutant K174Q slows tau turnover and induces cognitive deficits in vivo. Acetyltransferase p300-induced tau acetylation is inhibited by salsalate and salicylate, which enhance tau turnover and reduce tau levels. In the PS19 transgenic mouse model of FTD, administration of salsalate after disease onset inhibited p300 activity, lowered levels of total tau and tau acetylated at K174, rescued tau-induced memory deficits and prevented hippocampal atrophy. The tau-lowering and protective effects of salsalate were diminished in neurons expressing K174Q tau. Targeting tau acetylation could be a new therapeutic strategy against human tauopathies.