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A hexanucleotide repeat expansion in the C9orf72 gene is the most common genetic cause of amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD). How this mutation leads to these neurodegenerative diseases remains unclear. Here, we show using patient stem cell-derived motor neurons that the repeat expansion impairs microtubule-based transport, a process critical for neuronal survival. Cargo transport defects are recapitulated by treating neurons from healthy individuals with proline-arginine and glycine-arginine dipeptide