The degraded, misfolded C terminus of TAR DNA-binding protein-43 is associated with a wide spectrum of neurodegenerative diseases, particularly frontotemporal lobar degeneration with ubiquitin-positive inclusions and amyotrophic lateral sclerosis. However, the precise mechanism of pathological cleavage of the TAR DNA-binding protein-43 remains unknown. Here we show that the TAR DNA-binding protein-43 C-terminal protein physically interacts with itself or with the cellular-folded yeast prion domain of Sup35 forming dynamic aggregates. This prion-like nature governs known cellular functions of the TAR DNA-binding protein-43, including subcellular localisation and exon skipping of the cystic fibrosis transmembrane conductance regulator. Significantly, mutants with a failure to engage in prion-like interactions are processed into an ~24-kDa C-terminal fragment of the TAR DNA-binding protein-43. The estimated cleavage site of degraded TAR DNA-binding protein-43 fragments corresponds to the pathological cleavage site identified in patients with the TAR DNA-binding protein-43 proteinopathies. Consistently, epigallocatechin gallate constrains prion-like interactions, attenuating pathological-like degradation. Thus, the native folding of TAR DNA-binding protein-43 C terminus acts as a guardian of pathogenesis, which is directly associated with loss-of-function.