Prion protein (PrP) misfolding and oligomerization are key pathogenic events in prion disease. Copper exposure has been linked to prion pathogenesis; however, its mechanistic basis is unknown. We resolve, with single-molecule precision, the molecular mechanism of Cu(2+)-induced misfolding of PrP under physiological conditions. We also demonstrate that misfolded PrPs serve as seeds for templated formation of aggregates, which mediate inflammation and degeneration of neuronal tissue. Using a single-molecule fluorescence assay, we demonstrate that Cu(2+) induces PrP monomers to misfold before oligomer assembly; the disordered amino-terminal region mediates this structural change. Single-molecule force spectroscopy measurements show that the misfolded monomers have a 900-fold higher binding affinity compared to the native isoform, which promotes their oligomerization. Real-time quaking-induced conversion demonstrates that misfolded PrPs serve as seeds that template amyloid formation. Finally, organotypic slice cultures show that misfolded PrPs mediate inflammation and degeneration of neuronal tissue. Our study establishes a direct link, at the molecular level, between copper exposure and PrP neurotoxicity.