A hallmark feature of Alzheimer's disease (AD) and other Tauopathies, like Frontotemporal Dementia with Parkinsonism linked to chromosome 17 (FTDP-17), is the accumulation of neurofibrillary tangles composed of the microtubule-associated protein Tau. As in AD, symptoms of FTDP-17 include cognitive decline, neuronal degeneration, and disruptions of sleep patterns. However, mechanisms by which Tau may lead to these disturbances in sleep and activity patterns are unknown. To identify such mechanisms, we have generated novel Drosophila Tauopathy models by replacing endogenous fly dTau with normal human Tau (hTau) or the FTDP-17 causing hTau V337M mutation. This mutation is localized in one of the microtubule-binding domains of hTau and has a dominant effect. Analyzing heterozygous flies, we found that aged hTau V337M flies show neuronal degeneration and locomotion deficits when compared to wild type or hTau WT flies. Furthermore, hTau V337M flies are hyperactive and they show a fragmented sleep pattern. These changes in the sleep/activity pattern are accompanied by morphological changes in the projection pattern of the central pacemaker neurons. These neurons show daily fluctuations in their connectivity, whereby synapses are increased during the day and reduced during sleep. Synapse formation requires cytoskeletal changes that can be detected by the accumulation of the end-binding protein 1 (EB1) at the site of synapse formation. Whereas, hTau WT flies show the normal day/night changes in EB1 accumulation, hTau V337M flies do not show this fluctuation. This suggests that hTau V337M disrupts sleep patterns by interfering with the cytoskeletal changes that are required for the synaptic homeostasis of central pacemaker neurons.