TMEM106B is a risk modifier for a growing list of age-associated dementias including Alzheimer’s and frontotemporal dementia, yet its function remains elusive. Two key questions that emerge from past work are whether the conservative T185S coding variant found in the minor haplotype contributes to protection, and whether the presence of TMEM106B is helpful or harmful in the context of disease. Here we address both issues while extending the testbed for study of TMEM106B from models of TDP to tauopathy. We show that TMEM106B deletion accelerates cognitive decline, hindlimb paralysis, neuropathology, and neurodegeneration. TMEM106B deletion also increases transcriptional overlap with human AD, making it a better model of disease than tau alone. In contrast, the coding variant protects against tau-associated cognitive decline, neurodegeneration, and paralysis without affecting tau pathology. Our findings show that the coding variant contributes to neuroprotection and suggest that TMEM106B is a critical safeguard against tau aggregation.