Converting normal prion protein (PrP(C)) to the pathogenic PrP(Sc) isoform is central to prion disease. We previously showed that, in the presence of lipids, recombinant mouse PrP (rPrP) can be converted into the highly infectious conformation, suggesting a crucial role of lipid-rPrP interaction in PrP conversion. To understand the mechanism of lipid-rPrP interaction, we analyzed the ability of various rPrP mutants to bind anionic lipids and to gain lipid-induced proteinase K (PK) resistance. We found that the N-terminal positively charged region contributes to electrostatic rPrP-lipid binding but does not affect lipid-induced PK resistance. In contrast, the highly conserved middle region of PrP, consisting of a positively charged region and a hydrophobic domain, is essential for lipid-induced rPrP conversion. The hydrophobic domain deletion mutant significantly weakened the hydrophobic rPrP-lipid interaction and abolished the lipid-induced C-terminal PK resistance. The rPrP mutant without positive charges in the middle region reduced the amount of the lipid-induced PK-resistant rPrP form. Consistent with a critical role of the middle region in lipid-induced rPrP conversion, both disease-associated P105L and P102L mutations, localized between lysine residues in the positively charged region, significantly affected lipid-induced rPrP conversion. The hydrophobic domain-localized 129 polymorphism altered the strength of hydrophobic rPrP-lipid interaction. Collectively, our results suggest that the interaction between the middle region of PrP and lipids is essential for the formation of the PK-resistant conformation. Moreover, the influence of disease-associated PrP mutations and the 129 polymorphism on PrP-lipid interaction supports the relevance of PrP-lipid interaction to the pathogenesis of prion disease.