Protein S enhances the rate of Factor Va inactivation by activated Protein C (Walker, F. J. (1980) J. Biol. Chem. 255, 5521-5524). The activity of protein S is saturable, appearing to interact stoichiometrically with activated Protein C. Diisopropylphosphate-modified activated Protein C reversed the effect of Protein S, further indicating that a Protein S-activated Protein C interaction is required for expression of the activity of Protein S. In the absence of phospholipid, Protein S had no effect on the rate of activated Protein C-catalyzed inactivation of Factor Va. The activity of Protein S was only expressed in the presence of phospholipid vesicles, where it appeared to increase the affinity of the inactivation system for phospholipid. Protein S had no effect upon the rate of Factor Va inactivation in the presence of saturating levels of phospholipid vesicles. The effects of Protein S on the kinetics of Factor Va inactivation corresponded with its effect on the interaction between activated Protein C and phospholipid vesicles, measured by light scattering. In the presence of Protein S, the binding of activated Protein C to phospholipid vesicles was enhanced. Protein S had no effect upon the binding on the zymogen (Protein C to phospholipid vesicles). In conclusion, the stimulatory effect of Protein S on the inactivation of Factor Va by activated Protein C can be attributed, in part, to the enhancement of the binding of activated Protein C to phospholipid vesicles.