Neurofibrillary tangles (NFTs), a hallmark of Alzheimer's disease, are intracellular silver and thioflavin S-staining aggregates that emerge from earlier accumulation of phospho-tau in the soma. Whether soluble misfolded but nonfibrillar tau disrupts neuronal function is unclear. Here we investigate if soluble pathological tau, specifically directed to the entorhinal cortex (EC), can cause behavioral or synaptic deficits. We studied rTgTauEC transgenic mice, in which P301L mutant human tau overexpressed primarily in the EC leads to the development of tau pathology, but only rare NFT at 16 months of age. We show that the early tau lesions are associated with nearly normal performance in contextual fear conditioning, a hippocampal-related behavior task, but more robust changes in neuronal system activation as marked by Arc induction and clear electrophysiological defects in perforant pathway synaptic plasticity. Electrophysiological changes were likely due to a presynaptic deficit and changes in probability of neurotransmitter release. The data presented here support the hypothesis that misfolded and hyperphosphorylated tau can impair neuronal function within the entorhinal-hippocampal network, even prior to frank NFT formation and overt neurodegeneration.