The neural microtubule-associated protein tau binds to and stabilizes microtubules. Because of alternative mRNA splicing, tau is expressed with either 3 or 4 C-terminal repeats. Two observations indicate that differences between these tau isoforms are functionally important. First, the pattern of tau isoform expression is tightly regulated during development. Second, mutation-induced changes in tau RNA splicing cause neuronal cell death and dementia simply by altering the isoform expression ratio. To investigate whether 3- and 4-repeat tau differentially regulate microtubule behavior in cells, we microinjected physiological levels of these two isoforms into EGFP-tubulin-expressing cultured MCF7 cells and measured the effects on the dynamic instability behavior of individual microtubules by time-lapse microscopy. Both isoforms suppressed microtubule dynamics, though to different extents. Specifically, 4-repeat tau reduced the rate and extent of both growing and shortening events. In contrast, 3-repeat tau stabilized most dynamic parameters about threefold less potently than 4-repeat tau and had only a minimal ability to suppress shortening events. These differences provide a mechanistic rationale for the developmental shift in tau isoform expression and are consistent with a loss-of-function model in which abnormal tau isoform expression results in the inability to properly regulate microtubule dynamics, leading to neuronal cell death and dementia.