Tauopathies are a heterogeneous group of neurodegenerative dementias involving perturbations in the levels, phosphorylation, or mutations of the microtubule-binding protein Tau. The heterogeneous pathology in humans and model organisms suggests differential susceptibility of neuronal types to wild-type (WT) and mutant Tau. WT and mutant human Tau-encoding transgenes expressed pan-neuronally in the Drosophila CNS yielded specific and differential toxicity in the embryonic neuroblasts that generate the mushroom body (MB) neurons, suggesting cell type-specific effects of Tau in the CNS. Frontotemporal dementia with parkinsonism-17-linked mutant isoforms were significantly less toxic in MB development. Tau hyperphosphorylation was essential for these MB aberrations, and we identified two novel putative phosphorylation sites, Ser(238) and Thr(245), on WT hTau essential for its toxic effects on MB integrity. Significantly, blocking putative Ser(238) and Thr(245) phosphorylation yielded animals with apparently structurally normal but profoundly dysfunctional MBs, because animals accumulating this mutant protein exhibited strongly impaired associative learning. Interestingly, the mutant protein was hyperphosphorylated at epitopes typically associated with toxicity and neurodegeneration, such as AT8, AT100, and the Par-1 targets Ser(262) and Ser(356), suggesting that these sites in the context of adult intact MBs mediate dysfunction and occupation of these sites may precede the toxicity-associated Ser(238) and Thr(245) phosphorylation. The data support the notion that phosphorylation at particular sites rather than hyperphosphorylation per se mediates toxicity or dysfunction in a cell type-specific manner.