Spongiform encephalopathies are believed to be transmitted by a unique mechanism involving self-propagating conformational conversion of prion protein into a misfolded form. Here we demonstrate that fundamental aspects of mammalian prion propagation, including the species barrier and strain diversity, can be reproduced in vitro in a seeded fibrillization of the recombinant prion protein variant Y145Stop. Our data show that species-specific substitution of a single amino acid in a critical region completely changes the seeding specificity of prion protein fibrils. Furthermore, we demonstrate that sequence-based barriers that prevent cross-seeding between proteins from different species can be bypassed, and new barriers established, by a template-induced adaptation process that leads to the emergence of new strains of prion fibrils. Although the seeding barriers observed in this study do not fully match those seen in animals, the present findings provide fundamental insight into mechanistic principles of these barriers at a molecular level.