Protein C inhibitor (PCI), which was originally identified as an inhibitor of activated protein C, also efficiently inhibits coagulation factors such as factor Xa and thrombin. Recently it was found, using purified proteins, that the anticoagulant thrombin-thrombomodulin complex was also inhibited by PCI. The paradoxical inhibitory effect of PCI on both coagulant and anticoagulant proteases raised questions about the role of PCI in plasma. We studied the role of thrombomodulin (TM)-dependent inhibition of thrombin by PCI in a plasma system. Clotting was induced by addition of tissue factor to recalcified plasma in the absence or presence of TM, and clot formation was monitored using turbidimetry. In the absence of TM, PCI-deficient plasma showed a slightly shorter coagulation time compared with normal plasma. Reconstitution with a physiologic amount of PCI gave normal clotting times. Addition of PCI to normal plasma and protein C-deficient plasma resulted in a minor prolongation of the clotting time. This suggested that PCI can act as a weak coagulation inhibitor in the absence of TM. TM caused a strong anticoagulant effect in normal plasma due to thrombin scavenging and activation of the protein C anticoagulant pathway. This effect was less pronounced when protein C-deficient plasma was used, but could be restored by reconstitution with protein C. When PCI was added to protein C-deficient plasma in the presence of TM, a strong anticoagulant effect of PCI was observed. This anticoagulant effect was most likely caused by the TM-dependent thrombin inhibition by PCI. However, when PCI was added to normal plasma containing TM, a strong procoagulant effect of PCI was observed, due to the inhibition of protein C activation. PCI-deficient plasma was less coagulant in the presence of TM. A concentration-dependent increase in clotting time was observed when PCI-deficient plasma was reconstituted with PCI. The combination of these results suggest that the major function of PCI in plasma during coagulation is the inhibition of thrombin. A decreased generation of activated protein C is a procoagulant consequence of the TM-dependent thrombin inhibition by PCI. We conclude that TM alters PCI from an anticoagulant into a procoagulant during tissue factor-induced coagulation.