Although cellular prion protein PrPC is well known for its implication in Transmissible Spongiform Encephalopathies, its functions remain elusive. Combining in vitro and in vivo approaches, we here show that PrPC displays the intrinsic capacity to protect neuronal cells from a pro-inflammatory TNFα noxious insult. Mechanistically, PrPC coupling to the NADPH oxidase-TACE α-secretase signaling pathway promotes TACE-mediated cleavage of transmembrane TNFα receptors (TNFRs) and the release of soluble TNFR, which limits the sensitivity of recipient cells to TNFα. We further show that PrPC expression is necessary for TACE α-secretase to stay at the plasma membrane in an active state for TNFR shedding. Such PrPC control of TACE localization depends on PrPC modulation of β1 integrin signaling and downstream activation of ROCK-I and PDK1 kinases. Loss of PrPC provokes TACE internalization, which in turn cancels TACE-mediated cleavage of TNFR and renders PrPC-depleted neuronal cells as well as PrPC knockout mice highly vulnerable to pro-inflammatory TNFα insult. Our work provides the prime evidence that in an inflammatory context PrPC adjusts the response of neuronal cells targeted by TNFα through TACE α-secretase. Our data also support the view that abnormal TACE trafficking and activity in prion diseases originate from a-loss-of-PrPC cytoprotective function.