The cellular prion protein (PrPC) is a cell surface glycoprotein attached to the membrane by a glycosylphosphatidylinositol (GPI)-anchor and plays a critical role in transmissible, neurodegenerative and fatal prion diseases. Alterations in membrane attachment influence PrPC-associated signaling, and the development of prion disease, yet our knowledge of the role of the GPI-anchor in localization, processing, and function of PrPC in vivo is limited We exchanged the PrPC GPI-anchor signal sequence of for that of Thy-1 (PrPCGPIThy-1) in cells and mice. We show that this modifies the GPI-anchor composition, which then lacks sialic acid, and that PrPCGPIThy-1 is preferentially localized in axons and is less prone to proteolytic shedding when compared to PrPC. Interestingly, after prion infection, mice expressing PrPCGPIThy-1 show a significant delay to terminal disease, a decrease of microglia/astrocyte activation, and altered MAPK signaling when compared to wild-type mice. Our results are the first to demonstrate in vivo, that the GPI-anchor signal sequence plays a fundamental role in the GPI-anchor composition, dictating the subcellular localization of a given protein and, in the case of PrPC, influencing the development of prion disease.