Machado-Joseph disease (MJD; also called spinocerebellar ataxia type 3) is a dominantly inherited late-onset neurodegenerative disorder caused by expansion of polyglutamine (polyQ)-encoding CAG repeats in the MJD1 gene (also known as ATXN3). Proteolytic liberation of highly aggregation-prone polyQ fragments from the protective sequence of the MJD1 gene product ataxin 3 (ATXN3) has been proposed to trigger the formation of ATXN3-containing aggregates, the neuropathological hallmark of MJD. ATXN3 fragments are detected in brain tissue of MJD patients and transgenic mice expressing mutant human ATXN3(Q71), and their amount increases with disease severity, supporting a relationship between ATXN3 processing and disease progression. The formation of early aggregation intermediates is thought to have a critical role in disease initiation, but the precise pathogenic mechanism operating in MJD has remained elusive. Here we show that L-glutamate-induced excitation of patient-specific induced pluripotent stem cell (iPSC)-derived neurons initiates Ca(2+)-dependent proteolysis of ATXN3 followed by the formation of SDS-insoluble aggregates. This phenotype could be abolished by calpain inhibition, confirming a key role of this protease in ATXN3 aggregation. Aggregate formation was further dependent on functional Na(+) and K(+) channels as well as ionotropic and voltage-gated Ca(2+) channels, and was not observed in iPSCs, fibroblasts or glia, thereby providing an explanation for the neuron-specific phenotype of this disease. Our data illustrate that iPSCs enable the study of aberrant protein processing associated with late-onset neurodegenerative disorders in patient-specific neurons.