Alzheimer disease (AD) is the only disease among the 10 leading causes of death that cannot be cured, prevented, or even slowed. Amyloid plaques and tau neurofibrillary tangles are the pathological hallmarks of AD, and levels of tau aggregation are tightly linked to cognitive decline. Several lines of evidence suggest that toxic tau oligomers play a pivotal role in the spread of tau pathology, and passive immunization using antibodies that neutralize tau oligomers offers promise in the battle to delay, and potentially even prevent onset of AD. We engineered scFv-M204 antibody, and cloned into pMES4 vector using Gibson assembly method. Next, we evaluated the ability of scFv-M204 antibody to bind tau oligomers, and inhibit seeding by brain-derived tau from tauopathy donors with AD and CTE in tau biosensor cells. Here we report a monoclonal antibody (M204) that binds tau oligomers of the full-length tau (Tau 40) and also the four-repeat domain of tau (Tau k18). M204 binds the aggregation-prone segments VQIINK and SVQIV in tau, and inhibits cell-to-cell seeding by tau oligomers, confirming the powerful role of theses sequences in promoting tau oligomerization. To minimize the size of the antibody, we sought to produce M204 as a single-chain variable-fragment (scFv) in Escherichia coli. The scFv-M204 was found to purify in three different conformations: monomer, dimer and trimer when expressed in the bacterial periplasm. The dimeric and trimeric conformations bind tau oligomers better than the monomeric form of scFv-M204, and importantly also inhibit tau aggregation in vitro and in HEK293 biosensor cells seeded by brain homogenates from human patients with tauopathies including AD and Chronic Traumatic Encephalopathy (CTE). The crystal structures of the monomer, dimer and trimer were determined revealing differences that could contribute to the increased binding and inhibition that we observed by higher order structures of scFv-M204. We speculate that by binding toxic oligomers, which are hypothesized to be early seeding-competent species that are formed by tau, our scFv-M204 antibody may have potential as an early-stage diagnostic for AD and other tauopathies, in addition to holding promise as a prospective therapeutic.