Accumulation of unfolded proteins can disturb the functions of the endoplasmic reticulum (ER), leading to ER-stress or unfolded protein response (UPR). Recent data have shown that activation of UPR can be found in postmortem brains of Alzheimer's disease (AD) patients; and biological markers for activation of UPR are abundant in neurons with diffuse phosphorylated tau. Although these observations suggest a linkage between ER-stress and tau pathology, little is known of their relationship. In this study, we found that high levels of phosphorylated PKR-like ER-resident kinase (p-PERK) and phosphorylated eukaryotic initiation factor 2 alpha (p-eIF2α) as markers for activation of UPR in the hippocampus of aged P301L mutant tau transgenic mice. The immunoreactivity of p-PERK was found to co-localize with that of phosphorylated tau. We then hypothesized that phosphorylation of tau could induce ER-stress and vice versa in promoting AD-like pathogenesis. By using the protein phosphatase 2A inhibitor okadaic acid (OA) as an inducer for phosphorylation of tau, we found that primary cultures of rat cortical neurons treated with OA triggered UPR as indicated by increased levels of p-PERK and p-eIF2α, splicing of mRNA for xbp-1 and elevated levels of mRNA for GADD153. On the other hand, thapsigargin as an ER-stress inducer stimulated phosphorylation of tau at Thr231, Ser262 and Ser396. Thapsigargin also induced activation of caspase-3 and cleavage of tau. These findings suggested that ER-stress and hyperphosphorylation of tau could be induced by each other to form a vicious cycle to propagate AD-like neurodegeneration.