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Sheep scrapie is the prototypical transmissible spongiform encephalopathy (prion disease), which has a fundamental pathogenesis involving conversion of normal cellular prion protein (PrPC [C superscript stands for cellular]) to disease-associated prion protein (PrPSc [Sc superscript stands for sheep scrapie]). Sheep microglial cell cultures, derived from a prnp 136VV/171QQ near-term fetal brain, were developed to study sheep scrapie in the natural host and to investigate potential cofactors in the prion conversion process. Two culture systems, a primary cell culture and a cell line transformed with the large T antigen of simian virus 40, were developed, and both were identified as microglial in origin as indicated by expression of several microglial phenotype markers. Following exposure to PrPSc, sheep microglial cells demonstrated relatively low levels (transformed cell line) to high levels (primary cell line) of PrPSc accumulation over time. The accumulated PrPSc demonstrated protease resistance, an inferred beta-sheet conformation (as determined by a commercial enzyme-linked immunosorbent assay), specific inhibition by anti-PrP antibodies, and was transmissible in a dose-dependent manner. Primary microglia coinfected with a small-ruminant lentivirus (caprine arthritis encephalitis virus-Cork strain) and PrPSc demonstrated an approximately twofold increase in PrPSc accumulation compared to that of primary microglia infected with PrPSc alone. The results demonstrate the in vitro utility of PrPSc-permissive sheep microglial cells in investigating the biology of natural prion diseases and show that small-ruminant lentiviruses enhance prion conversion in cultured sheep microglia.