Aggregation of mutant Huntingtin protein (mHtt) leads to neuronal cell death and human disease. We investigated the effect of inclusion formation on yeast cells. Previous work indicates that mHtt protein moves both in and out of inclusions, potentially undergoing refolding in the inclusion. However, the sustained influx of unfolded protein into an inclusion leads to a dramatic change from a phase-separated body to an irregular, less soluble form at a threshold inclusion size. Altered morphology was associated with a prion-like seeding that accelerated inclusion growth despite loss of soluble cytoplasmic protein. The structural change abolished exchange of material between the inclusion and the cytosol and resulted in early cell death. Affected cells continued to divide occasionally, giving rise to daughters with a similar phenotype. Most newly born cells were able to reverse the prion-like aggregation, restoring both soluble cytoplasmic protein and a normal inclusion structure.