Formation of new neurons in the adult brain takes place in the subventricular zone and in the subgranule layer of the dentate gyrus throughout life. Neurogenesis is thought to play a role in hippocampus- and olfaction-dependent learning and memory. However, whether impairments in neurogenesis take place in learning and memory disorders, such as Alzheimer's disease, is yet to be established. Importantly, it remains to be elucidated whether neurogenic impairments play a role in the course of the disease or are the result of extensive neuropathology. We now report that transgenic mice harboring familial Alzheimer's disease-linked mutant APPswe/PS1DeltaE9 exhibit severe impairments in neurogenesis that are evident as early as 2 months of age. These mice exhibit a significant reduction in the proliferation of neural progenitor cells and their neuronal differentiation. Interestingly, levels of hyperphosphorylated tau, the cytotoxic precursor of the Alzheimer's disease hallmark neurofibrillary tangles, are particularly high in the neurogenic niches. Isolation of neural progenitor cells in culture reveals that APPswe/PS1DeltaE9-expressing neurospheres exhibit impaired proliferation and tau hyperphosphorylation compared with wildtype neurospheres isolated from nontransgenic littermates. This study suggests that impaired neurogenesis is an early critical event in the course of Alzheimer's disease that may underlie memory impairments, at least in part, and exacerbate neuronal vulnerability in the hippocampal formation and olfaction circuits. Furthermore, impaired neurogenesis is the result of both intrinsic pathology in neural progenitor cells and extrinsic neuropathology in the neurogenic niches. Finally, hyperphosphorylation of the microtubule-associated protein tau, a critical player in cell proliferation, neuronal maturation, and axonal transport, is a major contributor to impaired neurogenesis in Alzheimer's disease.