Rationale: Endothelial thrombomodulin (TM) regulates thrombosis and inflammation. Diverse forms of pulmonary and vascular injury are accompanied by down-regulation of TM, which aggravates tissue injury. We postulated that anchoring TM to the endothelial surface would restore its protective functions. Objectives: To design an effective and safe strategy to treat pulmonary thrombotic and inflammatory injury. Methods: We synthesized a fusion protein, designated scFv/TM, by linking the extracellular domain of mouse TM to a single-chain variable fragment of an antibody to platelet endothelial cell adhesion molecule-1 (PECAM-1). The targeting and protective functions of scFv/TM were tested in mouse models of lung ischemia-reperfusion and acute lung injury (ALI) caused by intratracheal endotoxin and hyperoxia, both of which caused approximately 50% reduction in the endogenous expression of TM. Measurements and Main Results: Biochemical assays showed that scFv/ TM accelerated protein C activation by thrombin and bound mouse PECAM-1 and cytokine high mobility group-B1. After intravenous injection, scFv/TM preferentially accumulated in the mouse pulmonary vasculature. In a lung model of ischemia-reperfusion injury, scFv/TM attenuated elevation of early growth response-1, inhibited pulmonary deposition of fibrin and leukocyte infiltration, and preserved blood oxygenation more effectively than soluble TM. In an ALI model, scFv/TM, but not soluble TM, suppressed activation of nuclear factor-kB, inflammation and edema in the lung and reduced mortality without causing hemorrhage. Conclusions: Targeting TM to the endothelium using an scFv anchor enhances its antithrombotic and antiinflammatory effectiveness in models of ALI.