Heparin cofactor II (HCII) is a plasma protein that inhibits thrombin rapidly in the presence of dermatan sulfate, heparan sulfate, or heparin. HCII has been proposed to regulate coagulation or to participate in processes such as inflammation, atherosclerosis, and wound repair. To investigate the physiologic function of HCII, about 2 kb of the mouse HCII gene, encoding the N-terminal half of the protein, was deleted by homologous recombination in embryonic stem cells. Crosses of F1HCII+/- animals produced HCII-/- offspring at the expected mendelian frequency. Biochemical assays confirmed the absence of dermatan sulfate-dependent thrombin inhibition in the plasma of HCII-/- animals. Crosses of HCII-/- animals produced litters similar in size to those obtained from heterozygous matings. At 1 year of age, HCII-deficient animals were grossly indistinguishable from their wild-type littermates in weight and survival, and they did not appear to have spontaneous thrombosis or other morphologic abnormalities. In comparison with wild-type animals, however, they demonstrated a significantly shorter time to thrombotic occlusion of the carotid artery after photochemically induced endothelial cell injury. This abnormality was corrected by infusion of purified HCII but not ovalbumin. These observations suggest that HCII might inhibit thrombosis in the arterial circulation.