Transmissible spongiform encephalopathies are fatal neurodegenerative diseases caused by the conversion of prion protein (PrP(C)) into an infectious isoform (PrP(Sc)). How this event leads to pathology is not fully understood. Here we demonstrate that protein synthesis in neurons is enhanced via PrP(C) interaction with stress-inducible protein 1 (STI1). We also show that neuroprotection and neuritogenesis mediated by PrP(C)-STI1 engagement are dependent upon the increased protein synthesis mediated by PI3K-mTOR signaling. Strikingly, the translational stimulation mediated by PrP(C)-STI1 binding is corrupted in neuronal cell lines persistently infected with PrP(Sc), as well as in primary cultured hippocampal neurons acutely exposed to PrP(Sc). Consistent with this, high levels of eukaryotic translation initiation factor 2alpha (eIF2alpha) phosphorylation were found in PrP(Sc)-infected cells and in neurons acutely exposed to PrP(Sc). These data indicate that modulation of protein synthesis is critical for PrP(C)-STI1 neurotrophic functions, and point to the impairment of this process during PrP(Sc) infection as a possible contributor to neurodegeneration.