Neurodegeneration in diseases caused by altered metabolism of mammalian prion protein (PrP) can be averted by reducing PrP expression. To identify novel pathways for PrP down-regulation, we analyzed cells that had adapted to the negative selection pressure of stable overexpression of a disease-causing PrP mutant. A mutant cell line was isolated that selectively and quantitatively routes wild-type and various mutant PrPs for ER retrotranslocation and proteasomal degradation. Biochemical analyses of the mutant cells revealed that a defect in glycosylphosphatidylinositol (GPI) anchor synthesis leads to an unprocessed GPI-anchoring signal sequence that directs both ER retention and efficient retrotranslocation of PrP. An unprocessed GPI signal was sufficient to impart ER retention, but not retrotranslocation, to a heterologous protein, revealing an unexpected role for the mature domain in the metabolism of misprocessed GPI-anchored proteins. Our results provide new insights into the quality control pathways for unprocessed GPI-anchored proteins and identify transamidation of the GPI signal sequence as a step in PrP biosynthesis that is absolutely required for its surface expression. As each GPI signal sequence is unique, these results also identify signal recognition by the GPI-transamidase as a potential step for selective small molecule perturbation of PrP expression.