The bilin-binding proteins (BBP) from lepidopteran insects are members of the lipocalin family of proteins and play a special role in pigmentation through the binding of biliverdin IXγ. Lopap, a BBP-like protein from the venom of the toxic caterpillar Lonomia obliqua has been reported to act as a serine protease that activates the coagulation proenzyme prothrombin. Here we show that BBPLo, a variant of lopap from the same organism binds biliverdin IXγ, forming a complex that is spectrally identical with previously described BBP proteins. Although BBPLo is nearly identical in sequence to lopap, no prothrombinase activity was detected in our recombinant preparations using reconstituted systems containing coagulation factors Xa and Va, as well as anionic phospholipids. In addition to biliverdin, BBPLo was found to form a 1∶1 complex with heme prompting us to examine whether the unusual biliverdin IXγ ligand of BBPs forms as a result of oxidation of bound heme in situ rather than by a conventional heme oxygenase. Using ascorbate or a NADPH+-ferredoxin reductase-ferredoxin system as a source of reducing equivalents, spectral changes are seen that suggest an initial reduction of heme to the Fe(II) state and formation of an oxyferrous complex. The complex then disappears and a product identified as a 5-coordinate carbonyl complex of verdoheme, an intermediate in the biosynthesis of biliverdin, is formed. However, further reaction to form biliverdin was not observed, making it unlikely that biliverdin IXγ is formed by this pathway.