Hyperphosphorylated isoforms of the microtubule-associated protein tau are the major components of neurofibrillary lesions in Alzheimer's disease (AD). Protein phosphatase (PP) 2A is a major phosphatase implicated in tau dephosphorylation in vitro. Dephosphorylation of tau can be blocked in vivo by okadaic acid, a potent inhibitor of PP2A. Moreover, activity of PP2A is reduced in AD brains. To elucidate the role of PP2A in tau phosphorylation and pathogenesis, we expressed a dominant negative mutant form of the catalytic subunit Calpha of PP2A, L199P, in mice by using a neuron-specific promoter. We obtained mice with high expression levels of Calpha L199P in cortical, hippocampal, and cerebellar neurons. PP2A activity in brain homogenates of transgenic mice was reduced to 66%. Endogenous tau protein was hyperphosphorylated at distinct sites including the AT8 epitope Ser-202/Thr-205, a major AD-associated tau phosphoepitope. AT8-positive tau aggregates accumulated in the soma and dendrites of cortical pyramidal cells and cerebellar Purkinje cells and co-localized with ubiquitin. Our data establish that PP2A plays a crucial role in tau phosphorylation. Our results also show that reduced PP2A activity is associated with altered compartmentalization and ubiquitination of tau, resembling a key pathological finding in AD.