The transmissible spongiform encephalopathies (TSEs) or prion diseases of animals are characterised by CNS spongiform change, gliosis and the accumulation of disease-associated forms of prion protein (PrP(d)). Particularly in ruminant prion diseases, a wide range of morphological types of PrP(d) depositions are found in association with neurons and glia. When light microscopic patterns of PrP(d) accumulations are correlated with sub-cellular structure, intracellular PrP(d) co-localises with lysosomes while non-intracellular PrP(d) accumulation co-localises with cell membranes and the extracellular space. Intracellular lysosomal PrP(d) is N-terminally truncated, but the site at which the PrP(d) molecule is cleaved depends on strain and cell type. Different PrP(d) cleavage sites are found for different cells infected with the same agent indicating that not all PrP(d) conformers code for different prion strains. Non-intracellular PrP(d) is full-length and is mainly found on plasma-lemmas of neuronal perikarya and dendrites and glia where it may be associated with scrapie-specific membrane pathology. These membrane changes appear to involve a redirection of the predominant axonal trafficking of normal cellular PrP and an altered endocytosis of PrP(d). PrP(d) is poorly excised from membranes, probably due to increased stabilisation on the membrane of PrP(d) complexed with other membrane ligands. PrP(d) on plasma-lemmas may also be transferred to other cells or released to the extracellular space. It is widely assumed that PrP(d) accumulations cause neurodegenerative changes that lead to clinical disease. However, when different animal prion diseases are considered, neurological deficits do not correlate well with any morphological type of PrP(d) accumulation or perturbation of PrP(d) trafficking. Non-PrP(d)-associated neurodegenerative changes in TSEs include vacuolation, tubulovesicular bodies and terminal axonal degeneration. The last of these correlates well with early neurological disease in mice, but such changes are absent from large animal prion disease. Thus, the proximate cause of clinical disease in animal prion disease is uncertain, but may not involve PrP(d).