Protein S is a cofactor in the tissue factor pathway inhibitor (TFPI) anticoagulant pathway. It enhances TFPIα-mediated inhibition of factor (F)Xa activity and generation. The enhancement is dependent on a TFPIα-protein S interaction, involving TFPIα Kunitz 3 and protein S laminin G-type (LG)-1. C4b binding protein (C4BP), which binds to protein S LG1, almost completely abolishes its TFPI cofactor function. However, neither the amino acids involved in TFPIα enhancement, nor the mechanisms underlying the reduced TFPI cofactor function of C4BP-bound protein S, are known. To screen for functionally important regions within protein S LG1 we generated seven variants with inserted N-linked glycosylation attachment sites. Protein S D253T and Q427N/K429T, displayed severely reduced TFPI cofactor function while showing normal activated protein C (APC) cofactor function and C4BP binding. Based on these results, we designed four protein S variants in which 4-6 surface exposed charged residues were substituted for alanine. One variant, protein S K255A/E257A/D287A/R410A/K423A/E424A, exhibited either abolished or severely reduced TFPI cofactor function in plasma and FXa inhibition assays, both in the presence or absence of FV-short, but retained normal APC cofactor function and high affinity C4BP-binding. The C4BP β-chain was expressed to determine the mechanisms behind the reduced TFPI cofactor function of C4BP-bound protein S. Like C4BP-bound protein S, C4BP β-chain-bound protein S had severely reduced TFPI cofactor function. These results show that protein S Lys255, Glu257, Asp287, Arg410, Lys423 and Glu424 are critical for protein S-mediated enhancement of TFPIα and that binding of the C4BP β-chain blocks this function.