Mutations in the microtubule-associated protein tau (MAPT) gene cause autosomal dominant frontotemporal lobar degeneration with tau inclusions (FTLD-tau). MAPT p.R406W carriers present clinically with progressive memory loss and neuropathologically with neuronal and glial tauopathy. However, the pathogenic events triggered by the expression of the mutant tau protein remain poorly understood. To identify the genes and pathways that are dysregulated in FTLD-tau, we performed transcriptomic analyses in induced pluripotent stem cell (iPSC)-derived neurons carrying MAPT p.R406W and CRISPR/Cas9-corrected isogenic controls. We found that the expression of the MAPT p.R406W mutation was sufficient to create a significantly different transcriptomic profile compared with that of the isogeneic controls and to cause the differential expression of 328 genes. Sixty-one of these genes were also differentially expressed in the same direction between MAPT p.R406W carriers and pathology-free human control brains. We found that genes differentially expressed in the stem cell models and human brains were enriched for pathways involving gamma-aminobutyric acid (GABA) receptors and pre-synaptic function. The expression of GABA receptor genes, including GABRB2 and GABRG2, were consistently reduced in iPSC-derived neurons and brains from MAPT p.R406W carriers. Interestingly, we found that GABA receptor genes, including GABRB2 and GABRG2, are significantly lower in symptomatic mouse models of tauopathy, as well as in brains with progressive supranuclear palsy. Genome wide association analyses reveal that common variants within GABRB2 are associated with increased risk for frontotemporal dementia (P < 1 × 10-3). Thus, our systems biology approach, which leverages molecular data from stem cells, animal models, and human brain tissue can reveal novel disease mechanisms. Here, we demonstrate that MAPT p.R406W is sufficient to induce changes in GABA-mediated signaling and synaptic function, which may contribute to the pathogenesis of FTLD-tau and other primary tauopathies.