Abstract The fibrinolytic system generates plasmin, which dissolves fibrin in haemostatic plugs and in thrombi. It is often regarded simply as a secondary phenomenon responsive to the generation of thrombi but it is, rather, in dynamic balance with fibrin formation, such that abnormalities in either can lead to thrombosis. This chapter summarizes the fibrinolytic system and its regulation. It considers the components of the system in blood, both in plasma and in circulating cells, with emphasis on protease–inhibitor balance. It goes on to discuss local fibrinolytic potential in thrombi, both venous and arterial, and in the diseased vessel wall, presenting evidence that increased local inhibition of fibrinolysis by PAI-1, PAI-2 and α 2-antiplasmin is intimately involved in thrombus stability and in the generation of fibrin-rich vessel wall lesions. Finally, it reviews the evidence that defective plasma fibrinolysis has a causal role in venous and arterial thrombosis.