The vitamin K-dependent gamma-carboxylation system in the endoplasmic reticulum membrane responsible for gamma-carboxyglutamic acid modification of vitamin K-dependent proteins includes gamma-carboxylase and vitamin K 2,3-epoxide reductase (VKOR). An understanding of the mechanism by which this system works at the molecular level has been hampered by the difficulty of identifying VKOR involved in warfarin sensitive reduction of vitamin K 2,3-epoxide to reduced vitamin K(1)H(2), the gamma-carboxylase cofactor. Identification and cloning of VKORC1, a proposed subunit of a larger VKOR enzyme complex, have provided opportunities for new experimental approaches aimed at understanding the vitamin K-dependent gamma-carboxylation system. In this work we have engineered stably transfected baby hamster kidney cells containing gamma-carboxylase and VKORC1 cDNA constructs, respectively, and stably double transfected cells with the gamma-carboxylase and the VKORC1 cDNA constructs in a bicistronic vector. All engineered cells showed increased activities of the enzymes encoded by the cDNAs. However increased activity of the gamma-carboxylation system, where VKOR provides the reduced vitamin K(1)H(2) cofactor, was measured only in cells transfected with VKORC1 and the double transfected cells. The results show that VKOR is the rate-limiting step in the gamma-carboxylation system and demonstrate successful engineering of cells containing a recombinant vitamin K-dependent gamma-carboxylation system with enhanced capacity for gamma-carboxyglutamic acid modification. The proposed thioredoxin-like (132)CXXC(135) redox center in VKORC1 was tested by expressing the VKORC1 mutants Cys(132)/Ser and Cys(135)/Ser in BHK cells. Both of the expressed mutant proteins were inactive supporting the existence of a CXXC redox center in VKOR.