The mechanism by which activated protein C stimulates fibrinolysis was studied in a simple radiolabeled clot lysis assay system containing purified tissue-type plasminogen activator, bovine endothelial plasminogen activator inhibitor (PAI), plasminogen, 125I-fibrinogen and thrombin. Fibrinolysis was greatly enhanced by the addition of purified bovine activated protein C; however, in the absence of PAI, activated protein C did not stimulate clot lysis, thus implicating this inhibitor in the mechanism. In clot lysis assay systems containing washed human platelets as a source of PAI, bovine-activated protein C-dependent fibrinolysis was associated with a marked decrease in PAI activity as detected using reverse fibrin autography. Bovine-activated protein C also decreased PAI activity of whole blood and of serum. In contrast to the bovine molecule, human-activated protein C was much less profibrinolytic in these clot lysis assay systems and much less potent in causing the neutralization of PAI. This species specificity of activated protein C in clot lysis assays reflect the known in vivo profibrinolytic species specificity. When purified bovine-activated protein C was mixed with purified PAI, complex formation was demonstrated using immunoblotting techniques after polyacrylamide gel electrophoresis in the presence of sodium dodecyl sulfate. These observations suggest that a major mechanism for bovine protein C-dependent fibrinolysis in in vitro clot lysis assays involves a direct neutralization of PAI by activated protein C.