The effects of an oxidative insult on cell survival and tau metabolism were investigated in human neuroblastoma SH‐SY5Y cells. In this treatment paradigm cells were exposed to the membrane permeant oxidant tert‐butylhydroperoxide (tBHP) for 40 min, returned to fresh media and cell survival/death was monitored during the post‐treatment period. Cell viability decreased significantly by 6 hr after tBHP exposure, and by 24 hr lactate dehydrogenase (LDH) release was 40.1 ± 8.8% in tBHP treated cells compared to 8.1 ± 4.7% in control cells. This oxidative stress paradigm also resulted in significant activation of caspase‐3 by 2 hr post‐treatment and nuclear apoptotic morphology. Furthermore, tBHP treatment also resulted in delayed tau proteolysis that was first evident 2 hr post‐treatment. Treatment of the cells with the general caspase inhibitor Boc‐Asp(OMe)‐Fluoromethylketone (BAF) completely inhibited caspase‐3 activation in response to tBHP, and delayed, but did not prevent cell death. BAF treatment also decreased tau proteolysis. In vitro, recombinant tau was readily proteolyzed by active recombinant caspase‐3 into a stable breakdown product. Further tau in the cell lysates was cleaved by active recombinant caspase‐3 at a rate, and to an extent similar to that observed for the well‐established caspase‐3 substrate poly(ADP‐ribose)polymerase (PARP). These results suggest that oxidative stress‐induced cell death occurs through both caspase‐dependent and‐independent pathways, and that tau is likely an in situ substrate of caspase‐3. J. Neurosci. Res. 61:515–523, 2000. © 2000 Wiley‐Liss, Inc.