The accumulation of hyperphosphorylated tau is a common feature of several dementias. Tau is one of the brain microtubule-associated proteins. Here we discuss tau's function in microtubule assembly and stabilization and with regards to tau's interactions with other proteins, membranes, and DNA. We describe and analyze important posttranslational modifications: hyperphosphorylation, glycosylation, ubiquitination, glycation, polyamination, nitration, and truncation. We discuss how these post-translational modifications can alter tau's biological function and what is known about tau self-assembly, and we propose a mechanism of tau polymerization. We analyze the impact of natural mutations on tau that cause fronto-temporal dementia associated with chromosome 17 (FTDP-1 7). Finally, we consider whether tau accumulation or its conformational change is related to tau-induced neurodegeneration, and we propose a mechanism of neurodegeneration.