Protein misfolding disorders are associated with conformational changes in specific proteins, leading to the formation of potentially neurotoxic amyloid fibrils. During pathogenesis of prion disease, the prion protein misfolds into β-sheet rich, protease-resistant isoforms. A key, hydrophobic domain within the prion protein, comprising residues 109–122, recapitulates many properties of the full protein, such as helix-to-sheet structural transition, formation of fibrils and cytotoxicity of the misfolded isoform. Using all-atom, molecular simulations, it is demonstrated that the monomeric 109–122 peptide has a preference for α-helical conformations, but that this peptide can also form β-hairpin structures resulting from turns around specific glycine residues of the peptide. Altering a single amino acid within the 109–122 peptide (A117V, associated with familial prion disease) increases the prevalence of β-hairpin formation and these observations are replicated in a longer peptide, comprising residues 106–126. Multi-molecule simulations of aggregation yield different assemblies of peptide molecules composed of conformationally-distinct monomer units. Small molecular assemblies, consistent with oligomers, comprise peptide monomers in a β-hairpin-like conformation and in many simulations appear to exist only transiently. Conversely, larger assemblies are comprised of extended peptides in predominately antiparallel β-sheets and are stable relative to the length of the simulations. These larger assemblies are consistent with amyloid fibrils, show cross-β structure and can form through elongation of monomer units within pre-existing oligomers. In some simulations, assemblies containing both β-hairpin and linear peptides are evident. Thus, in this work oligomers are on pathway to fibril formation and a preference for β-hairpin structure should enhance oligomer formation whilst inhibiting maturation into fibrils. These simulations provide an important new atomic-level model for the formation of oligomers and fibrils of the prion protein and suggest that stabilization of β-hairpin structure may enhance cellular toxicity by altering the balance between oligomeric and fibrillar protein assemblies.