Protein S, the protein cofactor for activated protein C in the proteolytic inactivation of factor Va, was chemically modified with a mixture of morpholine and formaldehyde. This treatment resulted in the conversion of the gamma-carboxyglutamic acid (Gla) residues of this vitamin K dependent protein to gamma-methyleneglutamic acid. With a 10,000-fold molar excess of morpholine and formaldehyde over protein S it was found that between 10 and 11 Gla residues could be modified. The degree of modification was proportional to the concentration of the modifying reagents used. The modification of as few as two residues resulted in the 70% loss of activity. Calcium inhibited the modification of several residues. In the presence of 3.2 mM calcium ion, a derivative with 2.5 residues modified was prepared that appeared to have full activity. Modification of protein S resulted in the alteration of a number of its properties. The quenching of intrinsic fluorescence by calcium decreased. The quenching effect of terbium ions was also decreased. However, the modified protein and the native protein were equivalent when protein-dependent terbium fluorescence was measured. When modified, protein S would no longer bind to phospholipid vesicles. Finally, the ability of protein S to self-associate was decreased by modification. These findings suggest that the gamma-carboxyglutamic acid residues of protein S may play several roles in the maintenance of structure.