The transmissible spongiform encephalopathies (TSEs) comprise a group of fatal neurodegenerative diseases that are characterized by the conversion of the normal host cellular prion protein (PrPC), to the abnormal protease-resistant prion protein isoform (PrP-res). It has been proposed, though not proven, that the infectious TSE agent consists solely of PrP-res and that PrP-res-induced conformational conversion of PrPC to additional PrP-res represents agent replication. In this study we demonstrate in situ conversion of protease-sensitive PrPC to PrP-res in TSE-infected brain slices. One step in this process is the binding of soluble PrPC to endogenous PrP-res deposits. The newly formed PrP-res associated with the slices in a pattern that correlated with the pre-existing brain distribution of PrP-res. Punctate in situ PrP conversion was observed in brain regions containing PrP-res amyloid plaques, and a more dispersed conversion product was detected in areas containing diffuse PrP-res deposits. These studies provide direct evidence that PrP-res formation involves the incorporation of soluble PrPC into both nonfibrillar and fibrillar PrP-res deposits in TSE-infected brain. Our findings suggest that the in situ PrP conversion reaction leads to additional polymerization of endogenous PrP-res aggregates and is analogous to the process of PrP-res fibril and subfibril growth in vivo.