Lactoferrin is a prominent component of neutrophil secondary granules and its blood concentration is increased in certain inflammatory diseases. Although the biochemical characterization of lactoferrin as an iron-binding protein has been well described, its physiological role in inflammation remains undefined. We examined the ability of lactoferrin to regulate glycosaminoglycan-accelerated thrombin-serine protease inhibitor (serpin) reactions. Lactoferrin effectively reduced the rate of thrombin-serpin (antithrombin and heparin cofactor II) reactions by three physiological glycosamino-glycans including heparin, heparan sulfate, and dermatan sulfate. An enzyme kinetics analysis showed that lactoferrin did not alter the apparent heparin-thrombin or the heparin-antithrombin dissociation constant values for the heparin-catalyzed thrombin-antithrombin reaction. However, the maximum reaction velocity at saturation with respect to either protein was markedly decreased by lactoferrin. The glycosaminoglycan-binding region of lactoferrin was analyzed following limited proteolysis using Staphylococcus aureus V8 protease. Two lactoferrin fragments with Mr's of approximately 8 and approximately 11 kDa were purified based on their affinity to heparin-Sepharose. Amino acid sequence analysis demonstrated that both peptides were from the N-terminus. Although slightly less capable compared to intact lactoferrin, the lactoferrin peptides effectively neutralized heparin, heparan sulfate, and dermatan sulfate-catalyzed serpin-thrombin inhibition reactions. In addition, lactoferrin N-terminal peptides have approximately the same binding affinity to heparin-Sepharose as that of intact lactoferrin. Inspection of both the N-terminal amino acid sequence and the crystal structure of lactoferrin further supports the conclusion that lactoferrin is a novel glycosaminoglycan binding protein and that the putative glycosaminoglycan-binding site is localized to the N-terminus.