There is now strong evidence to show that the presence of the cellular prion protein (PrP(C)) mediates amyloid-β (Aβ) neurotoxicity in Alzheimer's disease (AD). Here, we probe the molecular details of the interaction between PrP(C) and Aβ and discover that substoichiometric amounts of PrP(C), as little as 1/20, relative to Aβ will strongly inhibit amyloid fibril formation. This effect is specific to the unstructured N-terminal domain of PrP(C). Electron microscopy indicates PrP(C) is able to trap Aβ in an oligomeric form. Unlike fibers, this oligomeric Aβ contains antiparallel β sheet and binds to a oligomer specific conformational antibody. Our NMR studies show that a specific region of PrP(C), notably residues 95-113, binds to Aβ oligomers, but only once Aβ misfolds. The ability of PrP(C) to trap and concentrate Aβ in an oligomeric form and disassemble mature fibers suggests a mechanism by which PrP(C) might confer Aβ toxicity in AD, as oligomers are thought to be the toxic form of Aβ. Identification of a specific recognition site on PrP(C) that traps Aβ in an oligomeric form is potentially a therapeutic target for the treatment of Alzheimer's disease.