Prime rib is located in the center section of the rib primal cut on the cow. This tender cut, along with the tenderloin, is furthest from the horn and the hoof.
The designation of "prime" comes from a grading process by the USDA. This is a voluntary process that is paid for by the ranchers or meat packers. Only about 2 percent of all beef receives the high quality designation of prime. Prime grade beef, which comes from young, well-fed cattle, has a high degree of marbling. This makes it tender and full of flavor when cooked. Prime grade beef is common in fine restaurants.