Heparin cofactor II (HCII) is a glycoprotein in human plasma that inhibits thrombin and chymotrypsin. Inhibition occurs when the protease attacks the reactive site peptide bond in HCII (Leu444-Ser445) and becomes trapped as a covalent 1:1 complex. Dermatan sulfate and heparin increase the rate of inhibition of thrombin, but not of chymotrypsin, greater than 1000-fold. The N-terminal portion of HCII contains two acidic repeats (Glu56-Asp-Asp-Asp-Tyr-Leu-Asp and Glu69-Asp-Asp-Asp-Tyr-Ile-Asp) that may bind to anion-binding exosite I of thrombin to facilitate covalent complex formation. To examine the importance of the acidic domain, we have constructed a series of 5' deletions in the HCII cDNA and expressed the recombinant HCII (rHCII) in Escherichia coli. Apparent second-order rate constants (k2) for inhibition of alpha-thrombin and chymotrypsin by each variant were determined. Deletion of amino acid residues 1-74 had no effect on the rate of inhibition of alpha-thrombin or chymotrypsin in the absence of a glycosaminoglycan. Similarly, the rate of inhibition of alpha-thrombin in the presence of a glycosaminoglycan was unaffected by deletion of residues 1-52. However, deletion of residues 1-67 (first acidic repeat) or 1-74 (first and second acidic repeats) greatly decreased the rate of inhibition of alpha-thrombin in the presence of heparin, dermatan sulfate, or a dermatan sulfate hexasaccharide that comprises the minimum high-affinity binding site for HCII. Deletion of one or both of the acidic repeats increased the apparent affinity of rHCII for heparin-Sepharose, suggesting that the acidic domain may interact with the glycosaminoglycan-binding site of native rHCII. The stimulatory effect of glycosaminoglycans on native rHCII was decreased by a C-terminal hirudin peptide which binds to anion-binding exosite I of alpha-thrombin. Furthermore, the ability of native rHCII to inhibit gamma-thrombin, which lacks the binding site for hirudin, was stimulated weakly by glycosaminoglycans. These results support a model in which the stimulatory effect of glycosaminoglycans on the inhibition of alpha-thrombin is mediated, in part, by the N-terminal acidic domain of HCII.