Prion diseases are a group of transmissible, fatal neurodegenerative disorders associated with the misfolding of the host-encoded prion protein, PrP(C), into a disease-associated form, PrP(Sc). The transmissible prion agent is principally formed of PrP(Sc) itself and is associated with extracellular vesicles known as exosomes. Exosomes are released from cells both in vitro and in vivo, and have been proposed as a mechanism by which prions spread intercellularly. The biogenesis of exosomes occurs within the endosomal system, through formation of intraluminal vesicles (ILVs), which are subsequently released from cells as exosomes. ILV formation is known to be regulated by the endosomal sorting complexes required for transport (ESCRT) machinery, although an alternative neutral sphingomyelinase (nSMase) pathway has been suggested to also regulate this process. Here, we investigate a role for the nSMase pathway in exosome biogenesis and packaging of PrP into these vesicles. Inhibition of the nSMase pathway using GW4869 revealed a role for the nSMase pathway in both exosome formation and PrP packaging. In agreement, targeted knockdown of nSMase1 and nSMase2 in mouse neurons using lentivirus-mediated RNAi also decreases exosome release, demonstrating the nSMase pathway regulates the biogenesis and release of exosomes. We also demonstrate that PrP(C) packaging is dependent on nSMase2, whereas the packaging of disease-associated PrP(Sc) into exosomes occurs independently of nSMase2. These findings provide further insight into prion transmission and identify a pathway which directly assists exosome-mediated transmission of prions.