Prion protein (PrP), normally a cell surface protein, has been detected in the cytosol of a subset of neurons. The appearance of PrP in the cytosol could result from either retro-translocation of misfolded PrP from the endoplasmic reticulum (ER) or impaired import of PrP into the ER. Transgenic mice expressing cytoplasmic PrP (cyPrP) developed neurodegeneration in cerebellar granular neurons, although no detectable pathology was observed in other brain regions. In order to understand why granular neurons in the cerebellum were most susceptible to cyPrP-induced degeneration, we investigated the subcellular localization of cyPrP. Interestingly, we found that cyPrP is membrane-bound. In transfected cells, it binds to the ER and plasma/endocytic vesicular membranes. In transgenic mice, it is associated with synaptic and microsomal membranes. Furthermore, the cerebellar neurodegeneration in transgenic mice correlates with the interaction between cyPrP and the hydrophobic lipid core of the membrane but not with either the aggregation status or the dosage of cyPrP. These results suggest that lipid membrane perturbation could be a cellular mechanism for cyPrP-induced neurotoxicity and explain the seemingly conflicting results concerning cyPrP.Prion diseases are a group of fatal neurodegenerative disorders that are sporadic, inherited, or transmissible (1). The resistance of PrP 2 knock-out mice to prion disease revealed the essential role of endogenous PrP in developing the two characteristics of prion disease, infectivity and neurodegeneration (2). In prion disease, a portion of PrP converts from its normal conformation, PrP C , to an insoluble and protease-resistant pathogenic conformation, PrP Sc (1). Compelling evidence supports that PrP Sc is the transmissible element in prion disease (3-5).Newly synthesized PrP contains an N-terminal signal sequence, which directs PrP to be co-translationally imported into the lumen of the ER. The signal sequence is cleaved within the ER, along with a C-terminal glycosylphosphatidylinositol signal sequence that is responsible for glycosylphosphatidylinositol anchor addition (6). Once folded correctly, PrP passes through the ER quality control machinery, maturing along the secretory pathway en route to the cell surface. In addition to cell surface and luminal localizations, cytosolic localized PrP has also been detected (7,8). Recent studies revealed that the cytosolic appearance of PrP could result from two independent but not mutually exclusive pathways. In a variety of cell lines, including primary neurons expressing endogenous PrP, it has been found that some PrP molecules misfold in the ER and are retro-translocated to the cytosol for proteasome degradation via the ER-associated degradation pathway (9 -13). Disease-associated PrP mutants have an increased tendency to misfold and are subjected to ER-associated degradation (9,10,12). An alternative pathway, the unsuccessful import of PrP because of the insufficiency of the PrP signal sequence, was revealed by an elegant study in...