Ataxin-3 is a deubiquitinating enzyme and the affected protein in the neurodegenerative disorder Machado-Joseph disease (MJD). The ATXN3 gene is alternatively spliced, resulting in protein isoforms that differ in the number of ubiquitin-interacting motifs. Additionally, nonsynonymous SNPs in ATXN3 cause amino acid changes in ataxin-3, and one of these polymorphisms introduces a premature stop codon in one isoform. Here, we examined the effects of different ataxin-3 isoforms and of the premature stop codon on ataxin-3's physiological function and on main disease mechanisms. At the physiological level, we show that alternative splicing and the premature stop codon alter ataxin-3 stability and that ataxin-3 isoforms differ in their enzymatic deubiquitination activity, subcellular distribution, and interaction with other proteins. At the pathological level, we found that the expansion of the polyglutamine repeat leads to a stabilization of ataxin-3 and that ataxin-3 isoforms differ in their aggregation properties. Interestingly, we observed a functional interaction between normal and polyglutamine-expanded ATXN3 allelic variants. We found that interactions between different ATXN3 allelic variants modify the physiological and pathophysiological properties of ataxin-3. Our findings indicate that alternative splicing and interactions between different ataxin-3 isoforms affect not only major aspects of ataxin-3 function but also MJD pathogenesis. Our results stress the importance of considering isoforms of disease-causing proteins and their interplay with the normal allelic variant as disease modifiers in MJD and autosomal-dominantly inherited diseases in general.