Mutations in p97/VCP cause the multisystem disease inclusion body myopathy, Paget disease of the bone and frontotemporal dementia (IBMPFD). p97/VCP is a member of the AAA+ (ATPase associated with a variety of activities) protein family and has been implicated in multiple cellular processes. One pathologic feature in IBMPFD is ubiquitinated inclusions, suggesting that mutations in p97/VCP may affect protein degradation. The present study shows that IBMPFD mutant expression increases ubiquitinated proteins and susceptibility to proteasome inhibition. Co-expression of an aggregate prone protein such as expanded polyglutamine in IBMPFD mutant cells results in an increase in aggregated protein that localizes to small inclusions instead of a single perinuclear aggresome. These small inclusions fail to co-localize with autophagic machinery. IBMPFD mutants avidly bind to these small inclusions and may not allow them to traffic to an aggresome. This is rescued by HDAC6, a p97/VCP-binding protein that facilitates the autophagic degradation of protein aggregates. Expression of HDAC6 improves aggresome formation and protects IBMPFD mutant cells from polyglutamine-induced cell death. Our study emphasizes the importance of protein aggregate trafficking to inclusion bodies in degenerative diseases and the therapeutic benefit of inclusion body formation.