The cellular prion protein (PrPC) consists of a flexible N-terminal tail (FT, aa 23–128) hinged to a membrane-anchored globular domain (GD, aa 129–231). Ligation of the GD with antibodies induces rapid neurodegeneration, which is prevented by deletion or functional inactivation of the FT. Therefore, the FT is an allosteric effector of neurotoxicity. To explore its mechanism of action, we generated transgenic mice expressing the FT fused to a GPI anchor, but lacking the GD (PrPΔ141–225, or “FTgpi”). Here we report that FTgpi mice develop a progressive, inexorably lethal neurodegeneration morphologically and biochemically similar to that triggered by anti-GD antibodies. FTgpi was mostly retained in the endoplasmic reticulum, where it triggered a conspicuous unfolded protein response specifically activating the PERK pathway leading to phosphorylation of eIF2α and upregulation of CHOP ultimately leading to neurodegeration similar to what was observed in prion infection.