The two pathological hallmarks of Alzheimer's disease, amyloid plaques and neurofibrillary tangles, involve two apparently unrelated proteins, the amyloid precursor protein (APP) and Tau. Although it is known that aberrant processing of APP is associated with Alzheimer's disease, the definitive role of APP in neurons is not yet clear. Tau regulates microtubule stabilization and assembly in axons and is, thus, an essential component of the microtubule-associated organelle transport machinery. Although several groups have reported physical interaction between APP and Tau, and induction of Tau phosphorylation by APP and beta-amyloid peptide, the functional connection between APP and Tau is unclear. To explore the possibility that the functions of these two proteins may somehow converge on the same cellular process, we overexpressed APPL, the Drosophila homologue of APP, along with Tau in Drosophila neurons. Panneural coexpression of APPL and Tau resulted in adults that, upon eclosion, failed to expand wings and harden the cuticle, which is suggestive of neuroendocrine dysfunction. We analyzed axonal transport when Tau and APPL were coexpressed and found that transport of axonal cargo was disrupted, as evidenced by increased retention of synaptic proteins in axons and scarcity of neuropeptide-containing vesicles in the distal processes of peptidergic neurons. In an independent approach, we demonstrated genetic interaction and phenotypic similarity between APPL overexpression and mutations in the Kinesin heavy chain (Khc) gene, the product of which is a motor for anterograde vesicle trafficking.