Protein S is anticoagulant in the absence of activated protein C because of direct interactions with coagulation Factors Xa and Va. Synthetic peptides corresponding to amino acid sequences of protein S were tested for their ability to inhibit prothrombinase activity. The peptide containing the C-terminal sequence of protein S, residues 621-635 (PSP14), reversibly inhibited prothrombinase activity in the presence but not in the absence of Factor Va (K(i) approximately 2 microM). PSP14 inhibition of prothrombinase was independent of phospholipids but could be competitively overcome by increasing Factor Xa concentrations, suggesting that the C-terminal region of protein S may compete for a Factor Xa binding site on Factor Va. Studies using peptides with amino acid substitutions suggested that lysines 630, 631, and 633 were critical residues. PSP14 inhibited Factor Va activity in Factor Xa-one-stage clotting assays. PSP14 inhibited protein S binding to immobilized Factor Va. When preincubated with protein S, antibodies raised against PSP14 inhibited binding of protein S to Factor Va and blocked inhibition of prothrombinase activity by protein S. These results show that the C-terminal region of protein S containing residues 621-635 is essential for binding of protein S to Factor Va and that this interaction contributes to anticoagulant action.