Priscilla is located in the Painted World of Aremias. To fight her, the first thing you must do is return to the Undead Asylum back to the cell where you started the game and acquire the Strange Doll. Next, return to Anor Londo and inside the large building on the left on the ground floor you can find the large black and white painting. Examine the painting to enter the world. Find your way to the end and defeat Priscilla.
Priscilla will almost always be invisible. The thing you must do in this fight is watch the ground for her footsteps, then swing at her where you think she is. If you hit her a few times she will become visible again for a short period of time. Once defeated you will get her soul and you can leave the Painted World.