Accumulation of abnormally hyperphosphorylated tau (P-tau) in the form of tangles of paired helical filaments and/or straight filaments is one of the hallmarks of Alzheimer's disease (AD) and other tauopathies. P-tau is also found unpolymerized in AD. Although the cognitive decline is known to correlate with the degree of neurofibrillary pathology, whether the formation of filaments or the preceding abnormal hyperphosphorylation of tau is the inhibitory entity that leads to neurodegeneration has been elusive. We have previously shown that cytosolic abnormally hyperphosphorylated tau in AD brain (AD P-tau) sequesters normal tau (N-tau), microtubule-associated protein (MAP) 1, and MAP2, which results in the inhibition of microtubule assembly and disruption of microtubules. Here, we show that polymerization of AD P-tau into filaments inhibits its ability to bind N-tau and as well as the ability to inhibit the assembly of tubulin into microtubules in vitro and in the regenerating microtubule system from cultured cells. Like AD P-tau, the in vitro abnormally hyperphosphorylated recombinant brain N-tau binds N-tau and loses this binding activity on polymerization into filaments. Dissociation of the hyperphosphorylated N-tau filaments by ultrasonication restores its ability to bind N-tau. These findings suggest that the nonfibrillized P-tau is most likely the responsible entity for the disruption of microtubules in neurons in AD. The efforts in finding a therapeutic intervention for tau-induced neurodegeneration need to be directed either to prevent the abnormal hyperphosphorylation of this protein or to neutralize its binding to normal MAPs, rather than to prevent its aggregation into filaments.