Factor Xa (FXa) proteolytically activates Factor VIII (FVIII) by cleaving P1 residues Arg(372), Arg(740), and Arg(1689). The Arg(372) site represents the rate-limiting step for procofactor activation, whereas cleavage at Arg(740) is a fast step. FXa also catalyzes inactivating cleavages that occur on a slower time scale than the activating ones. To assess the role of sequences flanking the Arg(372) and Arg(740) sites, recombinant FVIII variants in which P3-P3' sequences were swapped individually or in combination were prepared. Replacing the Arg(372) flanking sequence with that from the Arg(740) site increased the rate of cleavage at Arg(372), as judged by the ~5-fold increased rate in A1 subunit generation, and reduced the FVIIIa-dependent lag time for in situ FXa generation. The reciprocal swap yielded a nearly 2-fold increase in the rate of Arg(372) cleavage, while the combined double-swap variant showed a 10-fold rate increase at that site, consistent with the individual effects being additive. Although this cleavage represents the slow step for activation, the rate of this reaction appeared to be ~9-fold greater than the rate of the primary inactivating cleavage at Arg(336) in generating the A1(336) product. Interestingly, replacement of the Arg(372) flanking sequence with the Arg(740) sequence combined with an Arg(740)Gln mutation yielded both more rapid cleavage of the Arg(372) site and accelerated inactivating cleavages within the A1 subunit. These results indicate that flanking sequences in part modulate the reaction rates required for procofactor activation and influence the capacity of FXa as an initial activator of FVIII rather than an inactivator.