The abnormal aggregation of the microtubule associated protein tau into paired helical filaments (PHFs) is one the hallmarks of Alzheimer's disease. The soluble protein is one of the longest natively unfolded proteins, lacking significant amounts of secondary structure over a sequence of 441 amino acids in the longest isoform. Furthermore, the unfolded character is consistent with some notable features of the protein like stability towards heat and acid treatment. It is still unclear how these characteristics support the physiological function of binding to and stabilization of microtubules. We review here some recent studies on how an unfolded protein such as tau can adopt beta-structure, which then leads to the highly ordered morphology of the PHFs. The core sequence for both microtubule binding and PHF formation is the microtubule binding domain containing three or four repeats. This region alone is sufficient for PHF formation and mostly unfolded in the soluble state. A search for sequence motifs within this region crucial for PHF building revealed two hexapeptides in the second and the third repeat. Some of the genetically linked cases of FTDP-17 show missense mutations in or adjacent to these hexapeptide motifs. Proteins containing the P301L and the DeltaK280 mutations exhibit accelerated aggregation. The importance of the two hexapeptides stems from their capacity to undergo a conformational change from a random coil to a beta sheet structure. The increase of beta sheet structure is a typical feature of an amyloidogenic protein and is the basis of other characteristics like a decreased sensitivity towards proteolytic degradation and Congo red binding. PHFs aggregated in vitro and in vivo contain beta-sheet structure, as judged by circular dichroism (CD) spectroscopy, Fourier transform infrared (FTIR) spectroscopy and X-ray diffraction.