In contrast to most amyloidogenic proteins or peptides that do not contain any significant post-translational modifications, the prion protein (PrP) is modified with either one or two polysaccharides and a GPI anchor which attaches PrP to the plasma membrane. Like other amyloidogenic proteins, however, PrP adopts a fibrillar shape when converted to a disease-specific conformation. Therefore, PrP polymerization offers a unique opportunity to examine the effects of biologically relevant non-peptidic modifications on conversion to the amyloid conformation. To test the extent to which a long hydrophobic chain at the C-terminus affects the intrinsic amyloidogenic propensity of PrP, we modified recombinant PrP with a N-myristoylamido-maleimidyl group, which can serve as a membrane anchor. We show that while this modification increases the affinity of PrP for the cell membrane, it does not alter the structure of the protein. Myristoylation of PrP affected amyloid formation in two ways: (i) it substantially decreased the extent of fibrillation, presumably due to off-pathway aggregation, and (ii) it prohibited assembly of filaments into higher-order fibrils by preventing their lateral association. The negative effect on lateral association was abolished if the myristoylated moiety at the C-terminus was replaced by a polar group of similar size or by a hydrophobic group of smaller size. When preformed PrP fibrils were provided as seeds, myristoylated PrP supported fibril elongation and formation of higher-order fibrils composed of several filaments. Our studies illustrate that, despite a bulky hydrophobic moiety at C-terminus, myristoylated PrP can still incorporate into fibrillar structure, and that the C-terminal hydrophobic substitution does not affect the size of the proteinase K resistant core, but controls the mode of lateral assembly of filaments into higher-order fibrils.