Polyalanine expansion mutations have been identified in eight transcription factors that are associated with a range of congenital disorders. While some of these mutant proteins have been shown to generate cellular aggregates in heterologous cell lines, little is known about the mechanism by which these aggregates cause disease. Here we examine the aggregation and functional properties of the two known polyalanine expansion mutations associated with X-linked Hypopituitarism (XH), SOX3^22Ala and SOX3^26Ala, which contain an additional seven and eleven alanine residues, respectively. SOX3^22Ala and SOX3^26Ala proteins form cytoplasmic aggregates and nuclear inclusions in transiently transfected COS-7 and CHO K1 cells, and in transfected explant cultures of chick neural epithelium. SOX3^26Ala exhibits a more potent aggregation phenotype, resulting in significantly more cells with dispersed cytoplasmic and large perinuclear aggregates. SOX3^22Ala and SOX3^26Ala protein aggregates exhibit the key properties of aggresomes including vimentin redistribution, colocalisation with the Microtubule Organising Centre and sensitivity to microtubule disruption. This is the first time that aggresomes have been implicated in the aetiology of a polyalanine expansion disorder, suggesting that XH and protein conformation disorders may become manifest through similar pathological mechanisms. Further, we show that mutant SOX3 proteins have impaired transcriptional activity and reduced capacity to inhibit beta-catenin/TCF-mediated transcription. These data suggest that deregulation of SOX3 target genes and inappropriate canonical Wnt signaling in central nervous system (CNS) progenitors may also contribute to dysfunction of the hypothalamic-pituitary axis in XH patients.