The scrapie (PrPSc) and cellular (PrPC) prion proteins are encoded by the same gene, and their different properties are thought to arise from posttranslational modifications. We have found a phosphatidylinositol glycolipid on both PrPC and PrP 27-30 (derived from PrPSc by limited proteolysis at the amino terminus). Ethanolamine, myo-inositol, phosphate, and stearic acid were identified as glycolipid components of gelpurified PrP 27-30. PrP 27-30 contains 2.8 moles of ethanolamine per mole. Incubation of PrP 27-30 with a bacterial phosphatidylinositol-specific phospholipase C (PIPLC) releases covalently bound stearic acid, and allows PrP 27-30 to react with antiserum specific for the PIPLC-digested glycolipid linked to the carboxyl terminus of the trypanosomal variant surface glycoprotein. PIPLC catalyzes the release of PrPC from cultured mammalian cells into the medium. These observations indicate that PrPC is anchored to the cell surface by the glycolipid.