Neurofibrillary tangles (NFTs) composed of hyperphosphorylated and misfolded tau protein are a pathological hallmark of Alzheimer’s disease and other tauopathy conditions. Tau is predominantly an intraneuronal protein but is also secreted in physiological and pathological conditions. The extracellular tau has been implicated in the seeding and propagation of tau pathology and is the prime target of the current tau immunotherapy. However, truncated tau species lacking the microtubule-binding repeat (MTBR) domains essential for seeding have been shown to undergo active secretion and the mechanisms and functional consequences of the various extracellular tau are poorly understood. We report here that the transcription factor EB (TFEB), a master regulator of lysosomal biogenesis, plays an essential role in the lysosomal exocytosis of selected tau species. TFEB loss of function significantly reduced the levels of interstitial fluid (ISF) tau in PS19 mice expressing P301S mutant tau and in conditioned media of mutant tau expressing primary neurons, while the secretion of endogenous wild-type tau was not affected. Mechanistically we found that TFEB regulates the secretion of truncated mutant tau lacking MTBR and this process is dependent on the lysosomal calcium channel TRPML1. Consistent with the seeding-incompetent nature of the truncated tau and supporting the concept that TFEB-mediated lysosomal exocytosis promotes cellular clearance, we show that reduced ISF tau in the absence of TFEB is associated with enhanced intraneuronal pathology and accelerated spreading. Our results support the idea that TFEB-mediated tau exocytosis serves as a clearance mechanism to reduce intracellular tau under pathological conditions and that effective tau immunotherapy should devoid targeting these extracellular tau species.