Vitamin K is an essential cofactor for post translational gamma-carboxylation of vitamin K-dependent coagulation factors. The modification is carried out by a system of integral proteins of the endoplasmic reticulum (ER) membrane where the warfarin sensitive vitamin K 2,3-epoxide reductase (VKOR) produces the reduced hydroquinone form of vitamin K (vit.KH(2)) needed by the gamma-carboxylase as the active cofactor. Currently, we have only limited knowledge about how the system functions at the molecular level. VKOR harbors a thiol red/ox center that is essential for electron transfer leading to vitamin K reduction. Reduction of this center with hydrophilic and hydrophobic trialkylphosphines shows that it is located in a hydrophobic environment which must be accessible by an as yet unidentified in vivo reductant of the center. Furthermore, we have addressed the question of whether VKOR or the gamma-carboxylase is the rate-limiting step in the vitamin K-dependent gamma-caboxylation system. A detailed kinetic analysis of an in vitro preparation of the system was undertaken in which gamma-carboxylation of the carboxylase peptide substrate FLEEL was measured as the gamma-carboxylation capacity of the system. Adding VKOR to the test system increased the gamma-carboxylation capacity of the system suggesting that VKOR is the rate-limiting step in the system. This finding puts VKOR in a central position to regulate biosynthesis of biologically active vitamin K-dependent proteins.