TDP-43 is a dimeric nuclear protein that plays a central role in RNA metabolism. In recent years, this protein has become a focal point of research in the amyotrophic lateral sclerosis and frontotemporal dementia (ALS/FTD) disease spectrum, as pathognomonic inclusions within affected neurons contain post-translationally modified TDP-43. A key question in TDP-43 research involves determining the mechanisms and triggers that cause TDP-43 to form pathological aggregates. This review gives a brief overview of the physiological and pathological roles of TDP-43 and focuses on the structural features of its protein domains and how they may contribute to normal protein function and to disease. A special emphasis is placed on the C-terminal prion-like region thought to be implicated in pathology, as it is where nearly all ALS/FTD-associated mutations reside. Recent structural studies of this domain revealed its crucial role in the formation of phase-separated liquid droplets through a partially populated α-helix. This new discovery provides further support for the theory that liquid droplets such as stress granules may be precursors to pathological aggregates, linking environmental effects such as stress to the potential etiology of the disease. The transition of TDP-43 among soluble, droplet, and aggregate phases and the implications of these transitions for pathological aggregation are summarized and discussed.