The endothelial cell surface receptor thrombomodulin (TM) displays various anticoagulant functions: it acts as a cofactor for the activation of protein C (PC) by thrombin, prevents the activation of fibrinogen, platelets and Factor V by thrombin. TM was also shown to accelerate the inhibition of thrombin by its physiological inhibitor antithrombin III (ATIII). The studies performed on rabbit lung TM were undertaken in order to provide better understanding, along with the identification and the characterization of functional domains, to the mechanism of action of TM. On the basis of the physical and chemical properties of TM, which were compatible with those of a proteoglycan, the presence of a sulfated polysaccharide chain covalently bound to TM, constituting an acidic domain independent of the protein C activation cofactor site, was suggested. Further enzymatic and chemical characterization showed that rabbit TM was in fact a chondroitin sulfate proteoglycan. Monoclonal antibodies raised against rabbit TM and proteins known for their ability to neutralize the activity of heparin, as well as TM submitted to chondroitinase digestion were used in order to identify the role of the different structural domains of TM. Binding of thrombin to TM at a primary site on the protein part is a prerequisite for all the biological activities of TM. However, while this binding is sufficient for TM to promote the activation of PC by thrombin, the inhibition by TM of thrombin-induced fibrinogen clotting and factor V activation requires the interaction of thrombin at a secondary site with the polysaccharide chain of TM. This interaction with the polysaccharide chain (which carries a highly sulfated trisaccharide at the non-reducing terminus) leads to the inhibition of the procoagulant functions of TM-bound thrombin towards fibrinogen and factor V as well as an increased reactivity of the enzyme with ATIII. These results were rationalized in the functional model proposed for the rabbit TM-proteoglycan. An original aspect of the TM-proteoglycan resides in the fact that the chondroitin sulfate side chain brings new anticoagulant activities, in addition to the PC activation cofactor activity, to the molecule. TM is a new type of proteoglycan with important regulatory function in hemostasis, which anticoagulant properties depend on both the protein core and the polysaccharide chain.