Prion diseases are marked by cerebral accumulation of the abnormal isoform of the prion protein. A fragment of prion protein composed of residues 106–126 (PrP106–126) exhibits similar properties to full length prion and plays a key role in the conformational conversion from cellular prion to its pathogenic pattern. Soluble oligomers of PrP106–126 have been proposed to be responsible for neurotoxicity. However, the monomeric conformational space and initial oligomerization of PrP106–126 are still obscure, which are very important for understanding the conformational conversion of PrP106–126. In this study, replica exchange molecular dynamics simulations were performed to investigate monomeric and dimeric states of PrP106–126 in implicit solvent. The structural diversity of PrP106–126 was observed and this peptide did not acquire stable structure. The dimeric PrP106–126 also displayed structural diversity and hydrophobic interaction drove the dimerization. To further study initial oligomerization of PrP106–126, 1 µs conventional molecular dynamics simulations of trimer and tetramer formation were carried out in implicit solvent. We have observed the spontaneous formation of several basic oligomers and stable oligomers with high β-sheet contents were sampled in the simulations of trimer and tetramer formation. The β-hairpin formed in hydrophobic tail of PrP106–126 with residues 118–120 in turn may stabilize these oligomers and seed the formation oligomers. This study can provide insight into the detailed information about the structure of PrP106–126 and the dynamics of aggregation of monomeric PrP106–126 into oligomers in atomic level.