The dissociation equilibrium constant for heparin binding to antithrombin III (ATIII) is a measure of the cofactor's binding to and activation of the proteinase inhibitor, and its salt dependence indicates that ionic and non-ionic interactions contribute ϳ40 and ϳ60% of the binding free energy, respectively. We now report that phenylalanines 121 and 122 (Phe-121 and Phe-122) together contribute 43% of the total binding free energy and 77% of the energy of non-ionic binding interactions. The large contribution of these hydrophobic residues to the binding energy is mediated not by direct interactions with heparin, but indirectly, through contacts between their phenyl rings and the non-polar stems of positively charged heparin binding residues, whose terminal amino and guanidinium groups are thereby organized to form extensive and specific ionic and non-ionic contacts with the pentasaccharide. Investigation of the kinetics of heparin binding demonstrated that Phe-122 is critical for promoting a normal rate of conformational change and stabilizing AT*H, the high affinity-activated binary complex. Kinetic and structural considerations suggest that Phe-122 and Lys-114 act cooperatively through non-ionic interactions to promote P-helix formation and ATIII binding to the pentasaccharide. In summary, although hydrophobic residues Phe-122 and Phe-121 make minimal contact with the pentasaccharide, they play a critical role in heparin binding and activation of antithrombin by coordinating the P-helixmediated conformational change and organizing an extensive network of ionic and non-ionic interactions between positively charged heparin binding site residues and the cofactor.The sulfated polysaccharide heparin functions as an anticoagulant by binding to antithrombin III (ATIII) 1 and greatly accelerating its rates of thrombin and factor Xa inhibition.Heparin binding to ATIII is a two-step process consisting of an initial weak interaction that induces a protein conformational change leading to the formation of a high affinity binary complex with the cofactor (AT*H) and ATIII activation (1, 2). Functional investigations of chemically modified, naturally occurring mutant and recombinant antithrombins have identified Arg-47, Lys-114, Lys-125, and Arg-129 as the most important positively charged amino acid residues in the heparin binding site of . Direct interactions of these basic residues with negatively charged groups of heparin are observed in the crystal structure of an ATIII-pentasaccharide complex (13). Studies of heparin binding kinetics indicate that Lys-125 is the most important amino acid in the initial docking with heparin and that Arg-129, Lys-114, and Arg-47 are critical for the protein conformational change step leading to the high affinity, activated AT*H complex. Heparin binding leads to elongation of ATIII helix D by 1.5 turns at its carboxyl-terminal end as well as the formation of a new alpha helix, the P-helix, at its amino-terminal end (13,14). These structural changes are associated with expulsion of the P14...