Transmissible spongiform encephalopathies (TSEs) such as scrapie in sheep, bovine spongiform encephalopathy (BSE) in cattle or Creutzfeldt-Jacob disease (CJD) and Gerstmann- Straussler-Scheinker syndrome (GSS) in humans, are caused by an infectious agent designated prion. The “protein only” hypothesis states that the prion consists partly or entirely of a conformational isoform of the normal host protein PrPC and that the abnormal conformer, when introduced into the organism, causes the conversion of PrPC into a likeness of itself. Since the proposal of the “protein only” hypothesis more than three decades ago, cloning of the PrP gene, studies on PrP knockout mice and on mice transgenic for mutant PrP genes allowed deep insights into prion biology. Reverse genetics on PrP knockout mice containing modified PrP transgenes was used to address a variety of problems: mapping PrP regions required for prion replication, studying PrP mutations affecting the species barrier, modeling familial forms of human prion disease, analysing the cell specificity of prion propagation and investigating the physiological role of PrP by structure-function studies. Many questions regarding the role of PrP in susceptibility to prions have been elucidated, however the physiological role of PrP and the pathological mechanisms of neurodegeneration in prion diseases are still elusive.