A common feature of scrapie and related transmissible spongiform encephalopathies is the accumulation of an abnormal protease-resistant form of PrP which may be the major component of the infectious agent. While it is known that both the normal (protease-sensitive) PrP and protease-resistant PrP are encoded by the same endogenous gene, the nature of the disease-associated modification of PrP is not understood. To study the cellular events leading to the formation of protease-resistant PrP, we have compared its biosynthesis to that of its normal isoform in scrapie-infected mouse neuroblastoma cells. In pulse-chase labeling experiments, the protease-resistant PrP was synthesized and degraded much more slowly than the normal PrP, suggesting that protease-resistant PrP is made from a protease-sensitive precursor. More significantly, we found that the precursor of protease-resistant PrP was eliminated from intact cells by treatments with phosphatidylinositol-specific phospholipase C and trypsin. This demonstrated that, unlike the protease-resistant PrP itself, the precursor is phospholipase- and protease-sensitive and at least transiently found on the cell surface. By these criteria, the precursor of protease-resistant PrP is indistinguishable from the normal PrP isoform. These results indicate that the conversion of PrP to the protease- and phospholipase-resistant state is a post-translational event that occurs after the precursor reaches the cell surface.