Abstract: This invention relates to transgenic mammals and birds that are not susceptible to spongiform encephalopathies (i.e., scrapie-like or prion diseases), due to absence of endogenous functional prion protein ("PrP"). More particularly, this invention relates to DNA targeting molecules that specifically disrupt PrP genes by homologous recombination in transfected animal cells, to cultured cells transformed with such DNA targeting molecules, and to animals derived from those transformed cells and the transgenic progeny of such animals.