Mutations in the microtubule-associated protein tau (MAPT) gene are known to cause familial frontotemporal dementia (FTD). The R406W tau mutation is a unique missense mutation whose patients have been reported to exhibit Alzheimer's disease (AD)-like phenotypes rather than the more typical FTD phenotypes. In this study, we established patient-derived induced pluripotent stem cell (iPSC) models to investigate the disease pathology induced by the R406W mutation. We generated iPSCs from patients and established isogenic lines using CRISPR/Cas9. The iPSCs were induced into cerebral organoids, which were dissociated into cortical neurons with high purity. In this neuronal culture, the mutant tau protein exhibited reduced phosphorylation levels and was increasingly fragmented by calpain. Furthermore, the mutant tau protein was mislocalized and the axons of the patient-derived neurons displayed morphological and functional abnormalities, which were rescued by microtubule stabilization. The findings of our study provide mechanistic insight into tau pathology and a potential for therapeutic intervention.