Rare mutations in the gene encoding for tau (MAPT, microtubule-associated protein tau) cause frontotemporal dementia-spectrum (FTD-s) disorders, including FTD, progressive supranuclear palsy (PSP) and corticobasal syndrome, and a common extended haplotype spanning across the MAPT locus is associated with increased risk of PSP and Parkinson’s disease. We identified a rare tau variant (p.A152T) in a patient with a clinical diagnosis of PSP and assessed its frequency in multiple independent series of patients with neurodegenerative conditions and controls, in a total of 15 369 subjects. Tau p.A152T significantly increases the risk for both FTD-s (n = 2139, OR = 3.0, CI: 1.6-5.6, P = 0.0005) and Alzheimer’s disease (AD) (n = 3345, OR = 2.3, CI: 1.3-4.2, P = 0.004) compared with 9047 controls. Functionally, p.A152T (i) decreases the binding of tau to microtubules and therefore promotes microtubule assembly less efficiently; and (ii) reduces the tendency to form abnormal fibers. However, there is a pronounced increase in the formation of tau oligomers. Importantly, these findings suggest that other regions of the tau protein may be crucial in regulating normal function, as the p.A152 residue is distal to the domains considered responsible for microtubule interactions or aggregation. These data provide both the first genetic evidence and functional studies supporting the role of MAPT p.A152T as a rare risk factor for both FTD-s and AD and the concept that rare variants can increase the risk for relatively common, complex neurodegenerative diseases, but since no clear significance threshold for rare genetic variation has been established, some caution is warranted until the findings are further replicated.