Vascular smooth muscle cells produce the proteolytically activated thrombin receptor. Under certain conditions, they have been reported to synthesize thrombomodulin (TM), another thrombin receptor known to convert the specificity of thrombin from cleavage of procoagulant/proinflammatory substrates to the cleavage of the anticoagulant/anti-inflammatory factor protein C. In this study, we examined the role of TM in modulating thrombin-mediated cellular responses. Using a thrombin receptor-positive TM-negative rabbit intimal smooth muscle cell line (RIC), we isolated cells expressing varying levels of functional surface TM after transfection with an expression vector containing the cDNA for full-length TM. The parent RIC (TM negative) line responded to alpha-thrombin and to agonist peptide (SFLLRN-PNDKYEPF; abbreviated SFLL) with both mitogenic response and phosphoinositol release. However, transfected cells producing high levels of TM, equivalent to the level on rabbit aortic endothelial cells, responded to SFLL but not to alpha-thrombin. Whereas alpha-thrombin, SFLL, and the combination of SFLL and thrombin resulted in a mitogenic response in the TM-negative RIC line, the response to the agonist peptide could be blocked by thrombin in the TM-producing cell line. The degree to which thrombin receptor activation was blocked directly correlated with the level of TM on the cell surface, and high levels of thrombin could overcome the inhibitory effect. Our data demonstrate that the coexpression of TM with thrombin receptor on vascular smooth muscle cells can result in a modulation of cellular responses to thrombin, which could control thrombin-induced proliferative events following vessel injury or insult.