Heparin cofactor II (HCII) inhibits thrombin rapidly in the presence of heparin or dermatan sulfate. The product of the inhibition reaction is a kinetically stable, 1:1 complex between the two proteins. We recently observed that heparin induces dissociation of complexes containing thrombin and the reactive site mutant HCII(L444R) to yield active thrombin and cleaved inhibitor (Han, J.-H., Van Deerlin, V. M. D., and Tollefsen, D. M. (1997) J. Biol. Chem. 272, 8243-8249). In the current study, we have investigated the mechanism by which heparin induces dissociation of the thrombin-HCII(L444R) complex. Heparin oligosaccharides ≤6 sugars in length induce dissociation, which suggests that dissociation does not depend on binding of a heparin molecule simultaneously to both proteins in the complex. Binding of heparin to HCII(L444R) in the complex also does not appear to be required, since the heparin dose response is unaltered for complexes containing the double mutant HCII(L444R/K173Q), which has decreased affinity for heparin. By contrast, binding of heparin to thrombin appears to be necessary and sufficient to induce dissociation. First, heparin fails to induce dissociation of complexes that contain thrombin(K236E), a variant with decreased heparin affinity. Second, a monoclonal IgG that interacts with the heparin-binding site of thrombin mimicks heparin in its ability to induce dissociation of the thrombin-HCII(L444R) complex. Finally, the complex of HCII(L444R) with thrombin(desPPW), which binds normally to heparin but lacks Pro(60B)Pro(60C)Trp(60D) in an insertion loop ('60-loop') between the heparin-binding site and the catalytic site, does not dissociate in the presence of heparin. These results suggest that binding of heparin to thrombin induces an allosteric effect causing destabilization of the thrombin-HCII(L444R) complex and that the allosteric effect may be mediated by the 60-loop.