The prion protein (PrP) is absolutely required for the development of prion diseases; nevertheless, its physiological functions in the central nervous system remain elusive. Using a combination of behavioral, electrophysiological and biochemical approaches in transgenic mouse models, we provide strong evidence for a crucial role of PrP in alcohol sensitivity. Indeed, PrP knock out (PrP(-/-)) mice presented a greater sensitivity to the sedative effects of EtOH compared to wild-type (wt) control mice. Conversely, compared to wt mice, those over-expressing mouse, human or hamster PrP genes presented a relative insensitivity to ethanol-induced sedation. An acute tolerance (i.e. reversion) to ethanol inhibition of N-methyl-D-aspartate (NMDA) receptor-mediated excitatory post-synaptic potentials in hippocampal slices developed slower in PrP(-/-) mice than in wt mice. We show that PrP is required to induce acute tolerance to ethanol by activating a Src-protein tyrosine kinase-dependent intracellular signaling pathway. In an attempt to decipher the molecular mechanisms underlying PrP-dependent ethanol effect, we looked for changes in lipid raft features in hippocampus of ethanol-treated wt mice compared to PrP(-/-) mice. Ethanol induced rapid and transient changes of buoyancy of lipid raft-associated proteins in hippocampus of wt but not PrP(-/-) mice suggesting a possible mechanistic link for PrP-dependent signal transduction. Together, our results reveal a hitherto unknown physiological role of PrP on the regulation of NMDAR activity and highlight its crucial role in synaptic functions.