The disease protein in frontotemporal lobar degeneration with ubiquitin-positive inclusions (FTLD-U) and amyotrophic lateral sclerosis (ALS) was identified recently as the TDP-43 (TAR DNA-binding protein 43), thereby providing a molecular link between these two disorders. In FTLD-U and ALS, TDP-43 is redistributed from its normal nuclear localization to form cytoplasmic insoluble aggregates. Moreover, pathological TDP-43 is abnormally ubiquitinated, hyperphosphorylated, and N-terminally cleaved to generate C-terminal fragments (CTFs). However, the specific cleavage site(s) and the biochemical properties as well as the functional consequences of pathological TDP-43 CTFs remained unknown. Here we have identified the specific cleavage site, Arg(208), of a pathological TDP-43 CTF purified from FTLD-U brains and show that the expression of this and other TDP-43 CTFs in cultured cells recapitulates key features of TDP-43 proteinopathy. These include the formation of cytoplasmic aggregates that are ubiquitinated and abnormally phosphorylated at sites found in FTLD-U and ALS brain and spinal cord samples. Furthermore, we observed splicing abnormalities in a cell culture system expressing TDP-43 CTFs, and this is significant because the regulation of exon splicing is a known function of TDP-43. Thus, our results show that TDP-43 CTF expression recapitulates key biochemical features of pathological TDP-43 and support the hypothesis that the generation of TDP-43 CTFs is an important step in the pathogenesis of FTLD-U and ALS.