Progressive supranuclear palsy syndrome (PSP-S) results from neurodegeneration within a network of brainstem, subcortical, frontal and parietal cortical brain regions. It is unclear how network dysfunction progresses and relates to longitudinal atrophy and clinical decline. In this study, we evaluated patients with PSP-S (n = 12) and healthy control subjects (n = 20) at baseline and 6 months later. Subjects underwent structural MRI and task-free functional MRI (tf-fMRI) scans and clinical evaluations at both time points. At baseline, voxel based morphometry (VBM) revealed that patients with mild-to-moderate clinical symptoms showed structural atrophy in subcortex and brainstem, prefrontal cortex (PFC; supplementary motor area, paracingulate, dorsal and ventral medial PFC), and parietal cortex (precuneus). Tf-fMRI functional connectivity (FC) was examined in a rostral midbrain tegmentum (rMT)-anchored intrinsic connectivity network that is compromised in PSP-S. In healthy controls, this network contained a medial parietal module, a prefrontal-paralimbic module, and a subcortical-brainstem module. Baseline FC deficits in PSP-S were most severe in rMT network integrative hubs in the prefrontal-paralimbic and subcortical-brainstem modules. Longitudinally, patients with PSP-S had declining intermodular FC between the subcortical-brainstem and parietal modules, while progressive atrophy was observed in subcortical-brainstem regions (midbrain, pallidum) and posterior frontal (perirolandic) cortex. This suggested that later-stage subcortical-posterior cortical change may follow an earlier-stage subcortical-anterior cortical disease process. Clinically, patients with more severe baseline impairment showed greater subsequent prefrontal-parietal cortical FC declines and posterior frontal atrophy rates, while patients with more rapid longitudinal clinical decline showed coupled prefrontal-paralimbic FC decline. VBM and FC can augment disease monitoring in PSP-S by tracking the disease through stages while detecting changes that accompany heterogeneous clinical progression.