Alzheimer's disease (AD) is characterized neuropathologically by intracellular neurofibrillary tangles (NFTs) formed of tau-based paired helical filaments (PHFs) and extracellular beta-amyloid plaques. The degree of Alzheimer dementia correlates with the severity of PHFs and NFTs. As an intraneuronal accumulation of oxidatively damaged proteins has been found in the brains of patients with AD, a dysfunction of the proteasomal system, which degrades damaged proteins, has been assumed to cause protein aggregation and therefore neurodegeneration in AD. In this study, we revealed that such proteasome dysfunction in AD brain results from the inhibitory binding of PHF-tau to proteasomes. We analysed the proteasome activity in brains from patients with AD and age-matched controls, and observed a significant decrease to 56% of the control level in the straight gyrus of patients with AD. This loss of activity was not associated with a decrease in the proteasome protein. PHF-tau co-precipitated during proteasome immunoprecipitation and proteasome subunits could be co-isolated during isolation of PHFs from AD brain. Furthermore, the proteasome activity in human brains strongly correlated with the amount of co-precipitated PHF-tau during immunoprecipitation of proteasome. Incubation of isolated proteasomes with PHF-tau isolated from AD brain, and with PHFs after in vitro assembly from human recombinant tau protein, resulted in a distinct inhibition of proteasome activity by PHF-tau. As this inhibition of proteasome activity was sufficient to induce neuronal degeneration and death, we suggest that PHF-tau is able directly to induce neuronal damage in the AD brain.