Huntington's disease (HD) is characterized by the selective loss of striatal projection neurons. In early stages of HD, neurodegeneration preferentially occurs in the lateral globus pallidus (LGP) and substantia nigra (SN), two regions in which the axons of striatal neurons terminate. Here we report that in mice expressing full-length mutant huntingtin and modeling early stages of HD, neuropil aggregates form preferentially in the LGP and SN. The progressive formation of these neuropil aggregates follows intranuclear accumulation of mutant huntingtin and becomes prominent from 11 to 27 months after birth. Neuropil aggregates, but no intranuclear inclusions, were observed in the LGP and SN, suggesting that huntingtin aggregates are formed in the axons of striatal projection neurons. In the LGP and SN, we observed degenerated axons in which huntingtin aggregates were associated with dark, swollen organelles that resemble degenerated mitochondria. Neuritic aggregates also form in cultured striatal neurons expressing mutant huntingtin, block protein transport in neurites, and cause neuritic degeneration before nuclear DNA fragmentation occurs. These findings suggest that the early neuropathology of HD originates from axonal dysfunction and degeneration associated with huntingtin aggregates.