The neuronal microtubule-associated protein tau has been implicated as having a role in the outgrowth of neural processes and the development of neuronal polarity. In vitro, tau promotes microtubule assembly, stabilizes cellular microtubules, and affects their dynamic behavior. Antisense experiments using cultured neurons provided evidence for an essential role of tau in the development of axons. However, tau knockout mice turned out to be surprisingly healthy and developed neurons which were functionally and structurally almost normal. This raises the question of how essential tau is for neuronal development. In the first part of this paper, data on the function of tau as a microtubule assembly-promoting and stabilizing factor are reviewed. Then, studies investigating the role of tau in the development of neuronal polarity are discussed. In the last part, recent results which provide evidence for a role of tau not directly related to its activity on microtubule assembly are summarized.