Previous studies indicated that human placental anticoagulant protein, a member of the lipocortin family, prolonged the clotting time of normal plasma when clotting was induced by brain thromboplastin or by kaolin in the presence of cephalin and calcium. Using a two-stage amidolytic assay to assess factor X activation and a tritiated peptide release assay to assess factor IX activation, we have examined the ability of purified preparations of placental anticoagulant protein (Mr = 36.5 kDa) to inhibit the activation of either factor X or factor IX by a complex of human factor VIIa-tissue factor. Placental anticoagulant protein markedly inhibits factor X and factor IX activation by factor VIIa-tissue factor in a non-competitive manner with Ki values of 40 nM and 70 nM, respectively. Placental anticoagulant protein had no effect on factor Xa amidolytic activity, and its inhibitory activity was not diminished by prior incubation with antibody raised against partially purified plasma extrinsic pathway inhibitor. Binding of placental anticoagulant protein to phospholipid vesicles, crude tissue factor and purified, relipidated human brain tissue factor apoprotein was observed only in the presence of calcium ions. These results indicate that placental anticoagulant protein is a potent factor VIIa-tissue factor inhibitor and suggests that its mechanism of action involves binding to the phospholipid portion of the tissue factor lipoprotein.