Expression of the frontotemporal dementia-related tau mutation, P301L, at physiological levels in adult mouse brain (KI-P301L mice) results in overt hypophosphorylation of tau and age-dependent alterations in axonal mitochondrial transport in peripheral nerves. To determine the effects of P301L tau expression in the central nervous system, we examined the kinetics of mitochondrial axonal transport and tau phosphorylation in primary cortical neurons from P301L knock-in (KI-P301L) mice. We observed a significant 50% reduction in the number of mitochondria in the axons of cortical neurons cultured from KI-P301L mice compared to wild-type neurons. Expression of murine P301L tau did not change the speed, direction of travel or likelihood of movement of mitochondria. Notably, the angle that defines the orientation of the mitochondria in the axon, and the volume of individual moving mitochondria, were significantly increased in neurons expressing P301L tau. We found that murine tau phosphorylation in KI-P301L mouse neurons was diminished and the ability of P301L tau to bind to microtubules was also reduced compared to tau in wild-type neurons. The P301L mutation did not influence the ability of murine tau to associate with membranes in cortical neurons or in adult mouse brain. We conclude that P301L tau is associated with mitochondrial changes and causes an early reduction in murine tau phosphorylation in neurons coupled with impaired microtubule binding of tau. These results support the association of mutant tau with detrimental effects on mitochondria and will be of significance for the pathogenesis of tauopathies.