Downtown Prescott is entirely walkable — the main historic sites, Whiskey Row, and the museums can all be reached on foot from the Courthouse Plaza area. For the Granite Dells and Watson Lake, you need a car: they are about 5 km north of downtown on AZ-89.
The Prescott National Forest trailheads vary in distance from the centre, with some accessible by bike. A car is useful for the full range of outdoor options, especially the Granite Basin area northwest of town.
Parking in downtown Prescott is generally easy and often free for the first few hours in the public lots near Courthouse Plaza.