Frontotemporal dementia (FTD) is a neurodegenerative behavioral disorder that selectively affects the salience network, including the ventral striatum and insula. Tau mutations cause FTD, but how mutant tau impairs the salience network is unknown. Here, we address this question using a mouse model expressing the entire human tau gene with an FTD-associated mutation (V337M). Mutant, but not wild-type, human tau transgenic mice had aging-dependent repetitive and disinhibited behaviors, with synaptic deficits selectively in the ventral striatum and insula. There, mutant tau depleted PSD-95, resulting in smaller postsynaptic densities and impaired synaptic localization of NMDA receptors (NMDARs). In the ventral striatum, decreased NMDAR-mediated transmission reduced striatal neuron firing. Pharmacologically enhancing NMDAR function with the NMDAR co-agonist cycloserine reversed electrophysiological and behavioral deficits. These results indicate that NMDAR hypofunction critically contributes to FTD-associated behavioral and electrophysiological alterations and that this process can be therapeutically targeted by a Food and Drug Administration–approved drug.