We conducted genome sequencing to search for rare variation contributing to early-onset Alzheimer's disease (EOAD) and frontotemporal dementia (FTD). Discovery analysis was conducted on 435 cases and 671 controls of European ancestry. Burden testing for rare variation associated with disease was conducted using filters based on variant rarity (less than one in 10,000 or private), computational prediction of deleteriousness (CADD) (10 or 15 thresholds), and molecular function (protein loss-of-function [LoF] only, coding alteration only, or coding plus non-coding variants in experimentally predicted regulatory regions). Replication analysis was conducted on 16,434 independent cases and 15,587 independent controls. Rare variants in TET2 were enriched in the discovery combined EOAD and FTD cohort (p = 4.6 × 10−8, genome-wide corrected p = 0.0026). Most of these variants were canonical LoF or non-coding in predicted regulatory regions. This enrichment replicated across several cohorts of Alzheimer's disease (AD) and FTD (replication only p = 0.0029). The combined analysis odds ratio was 2.3 (95% confidence interval [CI] 1.6–3.4) for AD and FTD. The odds ratio for qualifying non-coding variants considered independently from coding variants was 3.7 (95% CI 1.7–9.4). For LoF variants, the combined odds ratio (for AD, FTD, and amyotrophic lateral sclerosis, which shares clinicopathological overlap with FTD) was 3.1 (95% CI 1.9–5.2). TET2 catalyzes DNA demethylation. Given well-defined changes in DNA methylation that occur during aging, rare variation in TET2 may confer risk for neurodegeneration by altering the homeostasis of key aging-related processes. Additionally, our study emphasizes the relevance of non-coding variation in genetic studies of complex disease.