Prion diseases are fatal neurodegenerative diseases characterised by the accumulation of misfolded prion protein (PrP(Sc)) in the brain. They are caused by the templated misfolding of normal cellular protein, PrP(C), by PrP(Sc). We have recently generated a unique cell system in which epitope-tagged PrP(C) competent to produce bona fide PrP(Sc) is expressed in neuroblastoma cells. Using this system we demonstrated that PrP(Sc) forms on the cell surface within minutes of prion exposure. Here, we describe the intracellular trafficking of newly formed PrP(Sc). After formation in GM1-enriched lipid microdomains at the plasma membrane, PrP(Sc) is rapidly internalised to early endosomes containing transferrin and cholera toxin B subunit. Following endocytosis, PrP(Sc) intracellular trafficking diverges: some is recycled to the plasma membrane via Rab11-labelled recycling endosomes; the remaining PrP(Sc) is subject to retromer-mediated retrograde transport to the Golgi. This pathway leads to lysosomal degradation, and we show that this is the dominant PrP(Sc) degradative mechanism in the early stages of prion infection.