Human protein Z (PZ) is a 62,000-Mr, vitamin K-dependent plasma protein whose structure is similar to coagulation factors VII, IX, X, protein C, and protein S, but whose function is not known. The procoagulant activity of factor Xa in a one-stage plasma coagulation assay is reduced when factor Xa is first incubated with PZ. This apparent inhibitory effect is time dependent, requires the presence of calcium ions and procoagulant phospholipids (rabbit brain cephalin), and appears predominantly related to the incubation period of PZ with cephalin. In serum the initial rate of inhibition of factor Xa with calcium ions and cephalin also is enhanced in the presence PZ. A PZ-dependent protease inhibitor (ZPI) has been isolated from plasma. ZPI is a 72,000-Mr single-chain protein with an N-terminal amino acid sequence of LAPSPQSPEXXA (X = indeterminate) and an estimated concentration in citrate-treated plasma of 1.0-1.6 microg/ml. In systems using purified components, the factor Xa inhibition produced by ZPI is rapid (>95% within 1 min by coagulation assay) and requires the presence of PZ, calcium ions, and cephalin. The inhibitory process appears to involve the formation of a factor Xa-PZ-ZPI complex at the phospholipid surface.