The self-induced formation of the disease-associated, protease-resistant prion protein (PrP-res) from the normal protease-sensitive isoform (PrP-sen) appears to be a key event in the pathogenesis of transmissible spongiform encephalopathies. The amino acid sequence specificity of PrP-res formation correlates with, and may account for, the species specificity in transmission of transmissible spongiform encephalopathy agents in vivo. To analyze the mechanism controlling the sequence specificity of PrP-res formation, we compared the binding of PrP-sen to PrP-res with its subsequent acquisition of protease resistance by using cell-free systems consisting of heterologous versus homologous mouse and hamster PrP isoforms. Our studies showed that heterologous PrP-sen can bind to PrP-res with little conversion to the protease-resistant state and, in doing so, can interfere with the conversion of homologous PrP-sen. The interference occurred with molar ratios of homologous to heterologous PrP-sen molecules as low as 1:1. The interference was due primarily to the inhibition of conversion, but not the binding, of the homologous PrP-sen to PrP-res. The results provide evidence that the sequence specificity of PrP-res formation in this model is determined more by the conversion to protease resistance than by the initial binding step. These findings also imply that after the initial binding, further intermolecular interactions between PrP-sen and PrP-res are required to complete the process of conversion to the protease-resistant state.