The nuclear RNA-binding protein TDP43 is integrally involved in the pathogenesis of amyotrophic lateral sclerosis (ALS) and frontotemporal lobar degeneration (FTLD). Previous studies uncovered N-terminal TDP43 isoforms that are predominantly cytosolic in localization, prone to aggregation, and enriched in susceptible spinal motor neurons. In healthy cells, however, these shortened (s)TDP43 isoforms are difficult to detect in comparison to full-length (fl)TDP43, raising questions regarding their origin and selective regulation. Here, we show that sTDP43 is created as a by-product of TDP43 autoregulation and cleared by nonsense-mediated RNA decay (NMD). sTDP43-encoding transcripts that escape NMD are rapidly degraded post-translationally via the proteasome and macroautophagy. Circumventing these regulatory mechanisms by overexpressing sTDP43 results in neurodegeneration via N-terminal oligomerization and impairment of flTDP43 splicing activity, in addition to RNA-binding-dependent gain-of-function toxicity. Collectively, these studies highlight endogenous mechanisms that tightly regulate sTDP43 expression and underscore the consequences of aberrant sTDP43 accumulation in disease.