Amyotrophic lateral sclerosis (ALS) is a fatal neurodegenerative disease characterized by mislocalization and aggregation of proteins in motor neurons. Ataxin-2 (ATXN2), an RNA-binding protein harboring 22-polyglutamine (polyQ) repeats, is a risk factor for ALS, when its polyQ repeats are expanded to 27-33 repeats. However, the physiological function of ATXN2 beyond its role in RNA regulation and how polyQ expansion in ATXN2 increases risk for ALS remain unclear. We previously demonstrated that Drosophila Atx2 functions as a regulator of microtubule (MT) dynamics in motor neurons. Here, we uncover the molecular mechanism underlying Atx2-mediated MT regulation and how polyQ expansion disrupts its function, using a mixed-sex population of Drosophila as a model system. Specifically, we show that Atx2 requires its RNA-binding Lsm domain to regulate MTs. Notably, the LSM domains of human ATXN2 rescue MT phenotype in Drosophila, demonstrating an evolutionarily conserved role of ATXN2 in MT regulation. Importantly, we find that polyQ-expanded ATXN2 forms cytoplasmic aggregates and leads to excessive MT destabilization. Additionally, polyQ expansion severely impairs axon outgrowth. Finally, we identify uncoordinated-76 (UNC-76/FEZ1) as a downstream effector of Atx2 in MT regulation and neuronal development.