To determine the structural basis of phosphatidylethanolamine (PE)-dependent activated protein C (APC) activity, we prepared a chimeric molecule in which the Gla domain and hydrophobic stack of protein C were replaced with the corresponding region of prothrombin. APC inactivation of factor Va was enhanced 10 -20-fold by PE. Protein S enhanced inactivation 2-fold and independently of PE. PE and protein S had little effect on the activity of the chimera. Factor Va inactivation by APC was approximately 5-fold less efficient than with the chimera on vesicles lacking PE and slightly more efficient on vesicles containing PE. The cleavage patterns of factor Va by APC and the chimera were similar, and PE enhanced the rate of Arg 506 and Arg 306 cleavage by APC but not the chimera. APC and the chimera bound to phosphatidylserine:phosphatidylcholine vesicles with similar affinity (K d Ϸ 500 nM), and PE increased affinity 2-3-fold. Factor Va and protein S synergistically increased the affinity of APC on vesicles without PE to 140 nM and with PE to 14 nM, but they were less effective in enhancing chimera binding to either vesicle. In a factor Xa one-stage plasma clotting assay, the chimera had ϳ5 times more anticoagulant activity than APC on PE-containing vesicles. Unlike APC, which showed a 10 fold dependence on protein S, the chimera was insensitive to protein S. To map the site of the PE and protein S dependence further, we prepared a chimera in which residues 1-22 were derived from prothrombin and the remainder were derived from protein C. This protein exhibited PE and protein S dependence. Thus, these special properties of the protein C Gla domain are resident outside of the region normally hypothesized to be critical for membrane interaction. We conclude that the protein C Gla domain possesses unique properties allowing synergistic interaction with factor Va and protein S on PE-containing membranes.