We previously demonstrated that heterozygous Gly197 to Arg mutation in PROC is associated with venous thrombosis due to the mutation abrogating both zymogenic and enzymatic activities of protein C and activated protein C (APC). In this study, we investigated the role of Gly197 on the structure and function of protein C by replacing it with Ala, Lys and Glu in separate constructs. Characterization of protein C mutants indicated their activation by thrombin is improved ~5–20-fold with the order of PC-G197K > PC-G197E > PC-G197A > PC-WT. Interestingly, the cofactor function of thrombomodulin (TM) in promoting the activation of zymogens by thrombin followed the reverse order of PC-WT > PC-G197A > PC-G197E > PC-G197K. The thrombin-generation inhibitory profiles of zymogens in a tissue factor-mediated thrombin generation assay using protein C-deficient plasma with or without supplementation with TM followed the same order of zymogen activation in the purified system. Evaluation of anticoagulant activities of APC derivatives by prothrombinase and aPTT assays revealed a normal activity for APC-G197A but dramatically impaired activity for the other two mutants. In the endothelial cell permeability assay, APC-G197A exhibited normal antiinflammatory activity, but the other two mutants were nearly inactive. These results suggest that Gly197 plays a key role in TM cofactor-dependent protein C activation by thrombin. It facilitates the recognition of protein C by thrombin in the presence of TM but impedes it in the absence of the cofactor. In APC, a small residue at this position is required for the proper folding/reactivity of the active-site pocket of the protease, a hypothesis supported by structural modeling.