Prion diseases are incurable neurodegenerative disorders in which the normal cellular prion protein (PrPC) converts into a misfolded isoform (PrPSc) with unique biochemical and structural properties that correlate with disease. In humans, prion disorders, such as Creutzfeldt-Jakob disease, present typically with a sporadic origin, where unknown mechanisms lead to the spontaneous misfolding and deposition of wild type PrP. To shed light on how wild-type PrP undergoes conformational changes and which are the cellular components involved in this process, we analyzed the dynamics of wild-type PrP from hamster in transgenic flies. In young flies, PrP demonstrates properties of the benign PrPC; in older flies, PrP misfolds, acquires biochemical and structural properties of PrPSc, and induces spongiform degeneration of brain neurons. Aged flies accumulate insoluble PrP that resists high concentrations of denaturing agents and contains PrPSc-specific conformational epitopes. In contrast to PrPSc from mammals, PrP is proteinase-sensitive in flies. Thus, wild-type PrP rapidly converts in vivo into a neurotoxic, protease-sensitive isoform distinct from prototypical PrPSc. Next, we investigated the role of molecular chaperones in PrP misfolding in vivo. Remarkably, Hsp70 prevents the accumulation of PrPSc-like conformers and protects against PrP-dependent neurodegeneration. This protective activity involves the direct interaction between Hsp70 and PrP, which may occur in active membrane microdomains such as lipid rafts, where we detected Hsp70. These results highlight the ability of wild-type PrP to spontaneously convert in vivo into a protease-sensitive isoform that is neurotoxic, supporting the idea that protease-resistant PrP Sc is not required for pathology. Moreover, we identify a new role for Hsp70 in the accumulation of misfolded PrP. Overall, we provide new insight into the mechanisms of spontaneous accumulation of neurotoxic PrP and uncover the potential therapeutic role of Hsp70 in treating these devastating disorders.