Activation of factor VIII by factor Xa is followed by proteolytic inactivation resulting from cleavage within the A1 subunit (residues 1-372) of factor VIIIa. Factor Xa attacks two sites in A1, Arg(336), which precedes the highly acidic C-terminal region, and a recently identified site at Lys(36). By using isolated A1 subunit as substrate for proteolysis, production of the terminal fragment, A1(37-336), was shown to proceed via two pathways identified by the intermediates A1(1-336) and A1(37-372) and generated by initial cleavage at Arg(336) and Lys(36), respectively. Appearance of the terminal product by the former pathway was 7-8-fold slower than the product obtained by the latter pathway. The isolated A1 subunit was cleaved slowly, independent of the presence of phospholipid. The A1/A3-C1-C2 dimer demonstrated an approximately 3-fold increased cleavage rate constant, and inclusion of phospholipid further enhanced this value by approximately 2-fold. Although association of A1 or A1(37-372) with A3-C1-C2 enhanced the rate of cleavage at Arg(336), inclusion of A3-C1-C2 did not affect the cleavage at Lys(36) in A1(1-336). A synthetic peptide 337-372 blocked the cleavage at Lys(36) (IC(50) = 230 microm) while showing little if any effect on cleavage at Arg(336). Proteolysis at Lys(36), and to a lesser extent Arg(336), was inhibited in a dose-dependent manner by heparin. These results suggest that inactivating cleavages catalyzed by factor Xa at Lys(36) and Arg(336) are regulated in part by the A3-C1-C2 subunit. Furthermore, cleavage at Lys(36) appears to be selectively modulated by the C-terminal acidic region of A1, a region that may interact with factor Xa via its heparin-binding exosite.