Results of transgenetic studies argue that the scrapie isoform of the prion protein (PrPSc) interacts with the substrate cellular PrP (PrPC) during conversion into nascent PrPSc. While PrPSc appears to accumulate primarily in lysosomes, caveolae-like domains (CLDs) have been suggested to be the site where PrPC is converted into PrPSc. We report herein that CLDs isolated from scrapie-infected neuroblastoma (ScN2a) cells contain PrPC and PrPSc. After lysis of ScN2a cells in ice-cold Triton X-100, both PrP isoforms and an N-terminally truncated form of PrPC (PrPC-II) were found concentrated in detergent-insoluble complexes resembling CLDs that were isolated by flotation in sucrose gradients. Similar results were obtained when CLDs were purified from plasma membranes by sonication and gradient centrifugation; with this procedure no detergents are used, which minimizes artifacts that might arise from redistribution of proteins among subcellular fractions. The caveolar markers ganglioside GM1 and H-ras were found concentrated in the CLD fractions. When plasma membrane proteins were labeled with the impermeant reagent sulfo-N-hydroxysuccinimide-biotin, both PrPC and PrPSc were found biotinylated in CLD fractions. Similar results on the colocalization of PrPC and PrPSc were obtained when CLDs were isolated from Syrian hamster brains. Our findings demonstrate that both PrPC and PrPSc are present in CLDs and, thus, support the hypothesis that the PrPSc formation occurs within this subcellular compartment.