Prion diseases are thought to arise through misfolding of the cellular protein PrP, which can exist in both cellular, PrP^C, and pathological, PrP^Sc, forms. According to the “protein only” hypothesis, disease results from infection with the misfolded prion form of the protein, or by inherited mutations in the PrP gene which apparently increase the propensity of the protein to misfold. The result is one of a number of devastating neurological diseases, which are inevitably fatal and are characteristed by spongiform changes in the brain. Hence prion diseases are also known as transmissable spongiform encephalopathies (TSEs). New advances in prion research were reviewed focusing on the structural characteristics of the PrP protein. Putative mechanisms for the conversion between PrP^C and PrP^Sc, and the factors thought to influence this change, are described. Progress in determining the physiological function of the PrP protein and prospects for diagnosis and treatment are discussed.