The influence of cholesterol on activated protein C (APC) anticoagulant activity in plasma and on factor Va inactivation was investigated. Anticoagulant and procoagulant activities of phosphatidylcholine/phosphatidylserine (PC/PS) vesicles containing cholesterol were assessed in the presence and absence of APC using factor Xa-1-stage clotting and factor Va inactivation assays. Cholesterol at approximate physiological membrane levels (30%) in PC/PS (60%/10% w/w) vesicles prolonged the factor Xa-1-stage clotting time dose-dependently in the presence of APC but not in the absence of APC. APC-mediated cleavage of purified recombinant factor Va variants that were modified at specific APC cleavage sites (Q306/Q679-factor Va; Q506/Q679-factor Va) was studied to define the effects of cholesterol on APC cleavage at R506 and R306. When compared to control PC/PS vesicles, cholesterol in PC/PS vesicles enhanced factor Va inactivation and the rate of APC cleavage at both R506 and R306. Cholesterol also enhanced APC cleavage rates at R306 in the presence of the APC cofactor, protein S. In summary, APC anticoagulant activity in plasma and factor Va inactivation as a result of cleavages at R506 and R306 by APC is markedly enhanced by cholesterol in phospholipid vesicles. These results suggest that cholesterol in a membrane surface may selectively enhance APC activities.