The microtubule-associated protein tau has risk alleles for both Alzheimer's disease and Parkinson's disease and mutations that cause brain degenerative diseases termed tauopathies. Aggregated tau forms neurofibrillary tangles in these pathologies, but little is certain about the function of tau or its mode of involvement in pathogenesis. Neuronal iron accumulation has been observed pathologically in the cortex in Alzheimer's disease, the substantia nigra (SN) in Parkinson's disease and various brain regions in the tauopathies. Here we report that tau-knockout mice develop age-dependent brain atrophy, iron accumulation and SN neuronal loss, with concomitant cognitive deficits and parkinsonism. These changes are prevented by oral treatment with a moderate iron chelator, clioquinol. Amyloid precursor protein (APP) ferroxidase activity couples with surface ferroportin to export iron, but its activity is inhibited in Alzheimer's disease, thereby causing neuronal iron accumulation. In primary neuronal culture, we found loss of tau also causes iron retention, by decreasing surface trafficking of APP. Soluble tau levels fall in affected brain regions in Alzheimer's disease and tauopathies, and we found a similar decrease of soluble tau in the SN in both Parkinson's disease and the 1-methyl-4-phenyl-1,2,3,6-tetrahydropyridine (MPTP) mouse model. These data suggest that the loss of soluble tau could contribute to toxic neuronal iron accumulation in Alzheimer's disease, Parkinson's disease and tauopathies, and that it can be rescued pharmacologically.