TAR DNA-binding protein-43 (TDP-43) is the principal component of ubiquitinated inclusions in amyotrophic lateral sclerosis (ALS) and the most common pathological subtype of frontotemporal dementia—frontotemporal lobar degeneration with TDP-43-positive inclusions (FTLD-TDP). To date, the C-terminus of TDP-43, which is aggregation-prone and contains almost all ALS-associated mutations, has garnered much attention while the functions of the N-terminus of TDP-43 remain largely unknown. To bridge this gap in our knowledge, we utilized novel cell culture and computer-assisted models to evaluate which region(s) of TDP-43 regulate its folding, self-interaction, biological activity and aggregation. We determined that the extreme N-terminus of TDP-43, specifically the first 10 residues, regulates folding of TDP-43 monomers necessary for proper homodimerization and TDP-43-regulated splicing. Despite such beneficial functions, we discovered an interesting dichotomy: full-length TDP-43 aggregation, which is believed to be a pathogenic process, also requires the extreme N-terminus of TDP-43. As such, we provide new insight into the structural basis for TDP-43 function and aggregation, and we suggest that stabilization of TDP-43 homodimers, the physiologically active form of TDP-43, may be a promising therapeutic strategy for ALS and FTLD-TDP.