Coagulation factor III (tissue factor) is required for significant activation of factor X in the presence of factor VIIa. Factor III is a membrane protein which requires bound phospholipids for activity, and removal of lipids during purification of factor III abolishes its activity. The activity can be recovered if lipids are added to the apoprotein under conditions known to favor reconstitution of membrane proteins into phospholipid bilayers. Indeed, incorporation of factor III into vesicular phospholipids is the essential event for recovery of factor III function, and is promoted by cadmium chloride. Using factor III from human placenta, we have studied the interactions of cadmium, phospholipids, and apoprotein which result in successful protein membrane reconstitution. The effects of phospholipids and cadmium can be independently optimized. Cadmium promotes reconstitution of factor III either with preformed phospholipid vesicles or as the vesicles form during slow dialysis. The incorporation of apoprotein into performed vesicles is completed within four minutes. These studies demonstrate successful activation of factor III apoprotein by incorporation into phospholipid vesicles and optimization of this activation using cadmium chloride.