Prion diseases result from the accumulation of a misfolded isoform (PrP(Sc)) of the normal host prion protein (PrP(C)). PrP(Sc) propagates by templating its conformation onto resident PrP(C) to generate new PrP(Sc). Although the nature of the PrP(Sc)-PrP(C) complex is unresolved, certain segments or specific residues are thought to feature critically in its formation. The polymorphic residue 129 is one such site under considerable study. We combined transmission studies with a novel live cell yeast-based fluorescence resonance energy transfer (FRET) system that models the molecular association of PrP in a PrP(Sc)-like state, as a way to explore the role of residue 129 in this process. We show that a reduction in efficiency of prion transmission between donor PrP(Sc) and recipient PrP(C) that are mismatched at residue 129 correlates with a reduction in FRET between PrP-129M and PrP-129V in our yeast model. We further show that this effect depends on the different secondary structure propensities of Met and Val, rather than the specific amino acids. Finally, introduction of the disease-associated P101L mutation (mouse- equivalent) abolished FRET with wild-type mouse PrP, whereas mutant PrP-P101L displayed high FRET with homologous PrP-P101L, as long as residue 129 matched. These studies provide the first evidence for a physical alteration in the molecular association of PrP molecules differing in one or more residues, and they further predict that the different secondary structure propensities of Met and Val define the impaired association observed between PrP(Sc) and PrP(C) mismatched at residue 129.