Neuronal and glial deposition of misfolded, proteolytically processed, polyubiquitinated and abnormally phosphorylated C-terminal fragments (CTFs) of the TAR DNA binding protein-43 (TDP-43) is a pathological hallmark of frontotemporal lobar degeneration with ubiquitin positive inclusions (FTLD-U) and certain cases of amyotrophic lateral sclerosis. We demonstrate that TDP-43 can be proteolytically processed by caspases upon induction of apoptosis to a major 35 kDa and a minor 25 kDa CTF. These fragments are initially soluble, but over time they accumulate as insoluble and pathologically phosphorylated derivatives. However, proteolytic processing appears not to be absolutely required for the deposition of insoluble TDP-43 species, since a caspase resistant mutant of TDP-43 is also converted into insoluble species. Phosphorylation at S409/410 apparently occurs late during the conversion of soluble to insoluble TDP-43, suggesting that phosphorylation is not a prerequisite for aggregation. Loss of function of the progranulin (PGRN) gene causes FTLD-U with TDP-43 positive inclusions and has been suggested to lead to caspase activation and subsequent TDP-43 processing. However, siRNA-mediated knockdown of PGRN in cell culture as well as a PGRN gene knockout in mice failed to cause the formation of the disease characterizing CTFs of TDP-43. Our findings therefore suggest that caspase-mediated processing generates CTFs of similar biochemical properties as those occurring in nuclear and cytoplasmic deposits of FTLD-U patients independent of PGRN levels.