Dystrophic axons comprising misfolded mutant prion protein (PrP) aggregates are a characteristic pathological feature in the prionopathies. These aggregates form inside endolysosomes -called endoggresomes-, within swellings that line up the length of axons of degenerating neurons. The pathways impaired by endoggresomes that result in failed axonal and consequently neuronal health, remain undefined. Here, we dissect the local subcellular impairments that occur within individual mutant PrP endoggresome swelling sites in axons. Quantitative high-resolution light and electron microscopy revealed the selective impairment of the acetylated vs tyrosinated microtubule cytoskeleton, while micro-domain image analysis of live organelle dynamics within swelling sites revealed deficits uniquely to the MT-based active transport system that translocates mitochondria and endosomes toward the synapse. Cytoskeletal and defective transport results in the retention of mitochondria, endosomes, and molecular motors at swelling sites, enhancing mitochondria-Rab7 late endosome contacts that induce mitochondrial fission via the activity of Rab7, and render mitochondria dysfunctional. Our findings point to mutant Pr Pendoggresome swelling sites as selective hubs of cytoskeletal deficits and organelle retention that drive the remodeling of organelles along axons. We propose that the dysfunction imparted locally within these axonal micro-domains spreads throughout the axon over time, leading to axonal dysfunction in prionopathies.