Blood coagulation can be initiated when factor VII or VIIa, a plasma protease, binds to its essential cofactor, tissue factor (TF), and proteolytically activates factors IX and X, triggering a cascade of events which eventually leads to the formation of thrombin and a fibrin clot. Plasma contains a lipoprotein-associated coagulation inhibitor (LACI) which inhibits activated factor X (Xa) directly and, in a Xa-dependent way, inhibits VII(a)/TF activity, presumably by forming a quaternary Xa/LACI/VII(a)/TF complex. Sequence analysis of complementary DNA clones has shown that LACI contains three tandemly repeated Kunitz-type serine protease inhibitory domains. To investigate the relationship between these Kunitz structures and LACI function, we have used site-directed mutagenesis to produce altered forms of LACI in which the residue at the active-site cleft of each Kunitz domain has been individually changed. The second Kunitz domain is required for efficient binding and inhibition of Xa, and both Kunitz domains 1 and 2 are required for the inhibition of VIIa/TF activity; but alteration of the active-site residue of the third Kunitz domain has no significant effect on either function. We propose that in the putative inhibitory complex, Kunitz domain 1 is bound to the active site of VII(a)/TF and that Kunitz domain 2 is bound to Xa's active site.