Tissue factor pathway inhibitor (TFPI) is a multivalent Kunitz-type inhibitor that directly inhibits factor Xa and, in a factor Xa- dependent fashion, also inhibits the factor VIIa/tissue factor (TF) catalytic complex. The Kunitz-2 domain in TFPI is needed for the binding and inhibition of factor Xa, while the Kunitz-1 domain appears to be responsible for binding factor VIIa in a quaternary factor Xa- TFPI-factor VIIa/TF inhibitory complex. Human leukocyte elastase (HLE) proteolytically cleaves TFPI between threonine-87 and threonine-88 within the polypeptide that links the Kunitz-1 and Kunitz-2 domains in the TFPI molecule. HLE treatment not only affects the ability of TFPI to inhibit factor VIIa/TF, but also dramatically reduces its inhibition of factor Xa. Both purified HLE and stimulated neutrophils regenerate TF activity from a preformed factor Xa-TFPI-factor VIIa/TF inhibitory complex. Kinetic analysis suggests that HLE cleavage does not effect the affinity of the initial encounter interaction between factor Xa and TFPI, whereas it markedly reduces the affinity of the final factor Xa:TFPI complex with Ki (final) values for untreated and HLE-treated TFPI of 58 pmol/L and 4.4 nmol/L, respectively. Thus, an epitope in the amino-terminal region of TFPI or a conformation of the TFPI molecule that requires the presence of this region is needed in concert with the Kunitz-2 domain to produce optimal inhibition of factor Xa by TFPI.