Purified scrapie prions contain one identifiable macromolecule, PrP 27-30, which polymerizes into rod-shaped amyloids. The rods can be dissociated with retention of scrapie infectivity upon incorporation of PrP 27-30 into detergent-lipid-protein complexes (DLPC) as well as liposomes. As measured by end-point titration, scrapie infectivity was increased greater than 100-fold upon dissociating the rods into liposomes. The incorporation of PrP 27-30 into liposomes was demonstrated by immunoelectron microscopy using colloidal gold. Detergent extraction of prion liposomes followed by chloroform/methanol extraction resulted in the reappearance of rods, indicating that this process is reversible. Scrapie prion infectivity in rods and liposomes was equally resistant to inactivation by irradiation at 254 nm and was unaltered by exposure to nucleases. A variety of lipids used for producing DLPC and liposomes did not alter infectivity. Fluorescently labeled PrP 27-30 in liposomes was used to study its entry into cultured cells. Unlike the rods which remained as large fluorescent extracellular masses, the PrP 27-30 in liposomes rapidly entered the cells and was seen widely distributed within the interior of the cell. PrP 27-30 is derived by limited proteolysis from a larger protein designated PrP(Sc) which is membrane bound. PrP(Sc) in membrane fractions was solubilized by incorporation in DLPC, thus preventing its aggregation into amyloid rods. The functional solubilization of scrapie prion proteins in DLPC and liposomes offers new approaches to the study of prion structure and the mechanism by which they cause brain degeneration.