Valosin-containing protein (VCP) is a highly conserved molecular chaperone that regulates a wide array of essential cellular processes. Mutations in VCP are causative of degenerative disease that can affect muscle, brain and bone. Despite VCP being implicated in many major pathways in the cell, the mechanism of disease pathogenesis is unknown. To gain insight into the degeneration associated with mutations in VCP, we developed and characterized a Drosophila model of disease that recapitulated VCP mutation-dependent toxicity. VCP is involved in a diverse array of activities, many of which we may not know. Therefore we employed an unbiased genetic screening method that has the potential to uncover unanticipated pathways affected in the disease. Using this approach, we identified four proteins that dominantly suppressed degeneration; one of which was Ube4b, one of the many known ancillary proteins that bind to VCP and determine its function. The three remaining dominant modifiers identified were all RNA-binding proteins including TBPH, the Drosophila orthologue of TAR (trans-activating response region) DNA-binding protein (TDP-43). TDP-43 has been identified as a major component of the ubiquitinated inclusions characteristic of an emerging spectrum of proteinopathies, including degeneration associated with VCP mutations. Redistribution of TDP-43 from the nucleus to the cytoplasm has been demonstrated in these proteinopathies but the significance of this was unknown. Here we demonstrated that TDP-43 and VCP interact genetically and disease-causing VCP mutations led to redistribution of TDP-43 to the cytoplasm in vitro and in vivo, replicating the major pathology observed in TDP-43 proteinopathies. Furthermore, we demonstrated that TDP-43 redistribution is sufficient to induce cytotoxicity. Together our results show that degeneration associated with VCP mutations is mediated, in part, by toxic gain of function of TDP-43 in the cytoplasm where its redistribution is possibly due to the altered binding repertoire of VCP. This work acts to further our understanding of the pathogenic mechanism of, not only VCP-related disease but also a broad array of TDP-43 proteinopathies that include frontotemporal dementia, inclusion body myopathies and amyotrophic lateral sclerosis.