One of the hallmarks of Alzheimer's disease is the formation of neurofibrillary tangles, intracellular aggregates of hyperphosphorylated, mislocalized tau protein, which are associated with neuronal loss. Changes in tau are known to impair cellular transport (including that of mitochondria) and are associated with cell death in cell culture and mouse models of tauopathy. Thus clearing pathological forms of tau from cells is a key therapeutic strategy. One critical modulator in the degradation and clearance of misfolded proteins is the co-chaperone CHIP (Carboxy terminus Hsp70 interacting Protein), which is known to play a role in refolding and clearance of hyperphosphorylated tau. Here, we tested the hypothesis that CHIP could ameliorate pathological changes associated with tau. We find that co-expressing CHIP with full-length tau, tau truncated at D421 mimicking caspase cleavage, or the short tauRDΔK280 tau construct containing only the tau repeat domain with a tauopathy mutation, decreases tau protein levels in human H4 neuroglioma cells in a manner dependent on the Hsp70-binding TPR domain of CHIP. The observed reduction in tau levels by CHIP is associated with a decrease of tau phosphorylation and reduced levels of cleaved Caspase 3 indicating that CHIP plays an important role in preventing tau-induced pathological changes. Furthermore, tau-associated mitochondrial transport deficits are rescued by CHIP co-expression in H4 cells. Together, these data suggest that the co-chaperone CHIP can rescue the pathological effects of tau, and indicate that other diseases of protein misfolding and accumulation may also benefit from CHIP upregulation.