The RNA-binding proteins TAR DNA-binding protein (TDP-43) and fused in sarcoma (FUS) play central roles in neurodegeneration associated with familial amyotrophic lateral sclerosis (ALS) and frontotemporal lobar degeneration with ubiquitin-positive inclusions (FTLD-U). Normally localized in the nucleus, in sites affected by ALS and FTLD-U they are mislocalized to the cytoplasm and form cytoplasmic inclusions. TDP-43 and FUS are transported to the nucleus in a Ran-GTPase-dependent manner via nuclear import receptors, but they also contribute to the formation of stress granules (SGs), which are intracytoplasmic structures incorporating RNA. C-terminal truncations of TDP-43 eliminate the nuclear transport signal and cause mislocalization of the protein to the cytoplasm, where it accumulates and forms SGs. ALS-associated FUS mutations impair nuclear transport and cause mislocalization of FUS to the cytoplasm, where it also contributes to assembly of SGs. Furthermore, the ALS susceptibility factor ataxin-2, recently identified as a potent modifier of TDP-43 toxicity, is also a predicted cytoplasmic RNA-binding protein and a constituent protein of SGs, suggesting that it is a part of the common pathologic cascade formed by TDP-43 and FUS. Thus, we propose that excessive mislocalization of the RNA-binding proteins TDP-43, FUS, and ataxin-2 into the cytoplasm leads to impairment of the RNA quality control system, forming the core of the ALS/FTLD-U degenerative cascade. In this review, we discuss the molecular basis of the novel disease spectrum of ALS/FTLD-U, including the neurodegenerative mechanism of the cytoplasmic RNA-binding proteins TDP-43 and FUS and the possibility of a novel therapeutic strategy.