Phospholipid transfer protein (PLTP) is an important regulator of high-density lipoprotein (HDL) metabolism. The two main functions of PLTP are transfer of phospholipids between lipoprotein particles and modulation of HDL size and composition in a process called HDL conversion. These PLTP-mediated processes are physiologically important in the transfer of surface remnants from lipolyzed triglyceride-rich lipoproteins to nascent HDL particles and in the generation of prebeta-HDL, the initial acceptor of excess peripheral cell cholesterol. The aim of the study presented here was to investigate the interrelationship between the two functions of PLTP. Plasma PLTP was chemically modified using diethylpyrocarbonate or ethylmercurithiosalicylate. The modified proteins displayed a dose-dependent decrease in phospholipid transfer activity and a parallel decrease in the ability to cause HDL conversion. Two recombinant PLTP mutant proteins, defective in phospholipid transfer activity due to a mutation in the N-terminal lipid-binding pocket, were produced, isolated, and incubated together with radioactively labeled HDL(3). HDL conversion was analyzed using three methods: native gradient gel electrophoresis, ultracentrifugation, and crossed immunoelectrophoresis. The results demonstrate that the mutant proteins (i) are able to induce only a modest increase in HDL particle size compared to the wild-type protein, (ii) are unable to release apoA-I from HDL(3), and (iii) do not generate prebeta-mobile particles following incubation with HDL(3). These data suggest that phospholipid transfer is a prerequisite for HDL conversion and demonstrate the close interrelationship between the two main activities of PLTP.