Abstract Frontotemporal dementia (FTD) is the second most common cause of dementia in patients under 65 years, characterized by diverse clinical symptoms, neuropathologies, and genetic background. Synaptic dysfunction is suggested to play a major role in FTD pathogenesis. Disturbances in the synaptic function can also be associated with the C9orf72 repeat expansion (C9-HRE), the most common genetic mutation causing FTD. C9-HRE leads to distinct pathological hallmarks, such as C9orf72 haploinsufficiency and development of toxic RNA foci and dipeptide repeat proteins (DPRs). FTD patient brains, including those carrying the C9-HRE, are also characterized by neuropathologies involving accumulation of TDP-43 and p62/SQSTM1 proteins. This study utilized induced pluripotent stem cell (iPSC)-derived cortical neurons from C9-HRE-carrying or sporadic FTD patients and healthy control individuals. We report that the iPSC neurons derived from C9-HRE carriers developed typical C9-HRE-associated hallmarks, including RNA foci and DPR accumulation. All FTD neurons demonstrated increased TDP-43 nucleus-to-cytosolic shuttling and p62/SQSTM1 accumulation, and changes in nuclear size and morphology. In addition, the FTD neurons displayed reduced number and altered morphologies of dendritic spines and significantly altered synaptic function indicated by a decreased response to stimulation with GABA. These structural and functional synaptic disturbances were accompanied by upregulated gene expression in the FTD neurons related to synaptic function, including synaptic signaling, glutamatergic transmission, and pre- and postsynaptic membrane, as compared to control neurons. Pathways involved in DNA repair were significantly downregulated in FTD neurons. Only one gene, NUPR2, potentially involved in DNA damage response, was differentially expressed between the sporadic and C9-HRE-carrying FTD neurons. Our results show that the iPSC neurons from FTD patients recapitulate pathological changes of the FTD brain and strongly support the hypothesis of synaptic dysfunction as a crucial contributor to disease pathogenesis in FTD.