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For the study of prion neurotoxicity, we used neural-grafting techniques: mice devoid of the normal host prion protein (Prnp% mice) received a neural graft and were intracerebrally infected with mouse prions. The growth and differentiation properties of neural grafts were defined. Growth of embryonic neuroectodermal tissue was optimal at gestational days 12.5-13.5. The blood-brain barrier is reconstituted after 7 weeks in most animals. Scrapie-infected PrPC-expressing grafts develop a severe spongiform encephalopathy and contain proteinase-resistant protein and infectivity. Infected grafts deliver high amounts of prions to the host brain without eliciting disease. Infected grafts show a progressive disruption of the blood-brain barrier. Following intraocular prion inoculation of a transplanted Prnp% mouse, prions do not reach the intracerebral graft, indicating that PrP expression is required for propagation along the optic tract.