Familial frontotemporal dementia (FTD), characterized by tau-negative, ubiquitin-positive inclusions at autopsy, is linked to a chromosomal region at 17q21 (FTDU-17), encompassing the gene encoding the microtubule associated protein tau, MAPT. Mutations in MAPT were previously identified in familial FTD with parkinsonism (FTDP-17); however, in FTDU-17 patients, no pathogenic mutations were found in exonic regions consistent with the lack of tauopathy in FTDU-17 brains. Here, we excluded mutations in MAPT by genomic sequencing of 138.5 kb in FTDU-17 patients. Next, to facilitate the identification of the actual underlying genetic defect, we assembled the 6.5 Mb FTDU-17 sequence. Annotation demonstrated that MAPT is surrounded by three highly homologous low-copy repeats (LCRs) in a region of 1.7 Mb. Using evolutionary studies, short tandem repeat-based linkage disequilibrium (LD) and macro-restriction mapping, we demonstrated that these LCRs are at the basis of a series of rearrangements in the MAPT genomic region. One is an inversion that occurred 3 million years ago and resulted in a common polymorphism in humans to date. This inversion plus flanking LCRs spanned approximately 1.3 Mb and was shown to underlie the extended LD and haplotypes H1 and H2 across MAPT. However, in the FTDU-17 families, we ascertained segregation analysis precluding a relationship between the FTDU-17 and the H1/H2 inversion. The presence of multiple homologous LCRs in the region predicts that other potentially more complex genomic rearrangements might be underlying FTDU-17.