The activity of protein phosphatase (PP)-2A, which regulates tau phosphorylation, is compromised in Alzheimer disease brain. Here we show that the transient transfection of PC12 cells with inhibitor-2 (I2PP2A) of PP2A causes abnormal hyperphosphorylation of tau at Ser396/Ser404 and Ser262/Ser356. This hyperphosphorylation of tau is observed only when a sub-cellular shift of I2PP2A takes place from the nucleus to the cytoplasm and is accompanied by cleavage of I2PP2A into a 20 kDa fragment. Memantine, an un-competitive inhibitor of N-methyl-D-aspartate receptors, inhibits this abnormal phosphorylation of tau and cell death and prevents the I2PP2A-induced inhibition of PP2A activity in vitro. These findings demonstrate novel mechanisms by which I2PP2A regulates the intracellular activity of PP2A and phosphorylation of tau, and by which Memantine modulates PP2A signaling and inhibits neurofibrillary degeneration.