Lipoprotein-associated coagulation inhibitor (LACI) inhibits activated Factor X (Xa) directly and, in an Xa-dependent fashion, inhibits Factor VIIa-tissue factor (TF), presumably by forming a quaternary Xa-LACI-VIIa-TF complex. LACI isolated from the conditioned media of HepG2 cells grown in the presence of [32P]orthophosphate was observed to be covalently phosphorylated. Dephosphorylation of 32P-LACI with phosphatase resulted in an almost complete removal of the radiolabel. Phosphoamino acid analysis of the purified 32P-LACI established that the phosphorylation occurred on (a) serine residue(s). At its N-terminus, LACI contains a cluster of acidic residues C-terminal to the serine-2 residue. Such a site is characteristic of the sites phosphorylated by casein kinase II (CKII) in protein substrates. Edman degradation of endogenously labelled 32P-LACI revealed that the serine-2 residue was a major site of phosphorylation. Phosphorylation of purified LACI by bovine CKII was observed to occur in vitro; amino acid sequence analysis demonstrated that CKII phosphorylated LACI at the serine-2 residue. Recombinant LACI expressed from mouse C127 fibroblasts transfected using a bovine-papilloma-virus expression vector was found to be endogenously phosphorylated. By using site-directed mutagenesis, an altered form of LACI was produced in which the serine-2 residue had been changed to alanine. This altered LACI, although expressed in similar quantity to the wild-type LACI, was not detectably phosphorylated. Using the altered LACI in functional studies demonstrated that a serine residue at position 2, and thus the phosphorylation of this site, was not essential for LACI's inhibition of Xa and VIIa-TF activities.