High affinity binding of factor VIIa (VIIa) to its cellular receptor tissue factor (TF), as well as association of factor X with phospholipid are required for optimal assembly of the extrinsic activation complex. In addition to the interactions of substrate with phospholipid and enzyme, we here provide evidence that cofactor residues Lys-165 and Lys-166 specifically contribute to the recognition of macromolecular substrate. Ala for Lys replacement in TFA165A166 was compatible with high affinity binding of VIIa when analyzed on cell surfaces as well as in the absence of phospholipid. Dissociation of TFA165A166.VIIa did not occur with a faster rate compared to TF.VIIa, further supporting unaltered VIIa binding function of TFA165A166. Cleavage of chromogenic peptidyl substrate by TFA165A166.VIIa complexes was not diminished, demonstrating that TFA165A166 supported enhancement of catalytic function of the VIIa protease domain. In contrast, factor X activation was reduced in the presence and absence of phospholipid. Further, TFA165A166 effectively competed with wild-type TF in the cleavage of factor X at limited VIIa concentrations. Selective reduction in macromolecular substrate hydrolysis combined with normal VIIa binding by TFA165A166 indicates that the cofactor TF does contribute, either directly or indirectly via specific interactions with VIIa, to factor X recognition.