Lipid oxidation due to oxidative stress plays an important role in the pathogenesis of inflammatory and thrombotic cardiovascular diseases. Several findings suggest that lipid peroxidation can alter the function of coagulation proteins and contribute to a hypercoagulable state, but the molecular mechanisms are unclear. Here, we report that oxidized phospholipids suppress the anticoagulant function of the serpin, protein Z-dependent protease inhibitor (ZPI), a specific inhibitor of membrane-associated factor Xa (FXa) that requires protein Z (PZ), phospholipid, and calcium as cofactors. We found that this suppression arises from a diminished ability of the oxidized membrane to function as a cofactor to promote ZPI inhibition of membranebound FXa, due fully or in part to the susceptibility of the bound ZPI-PZ complex to oxidative inactivation. Surprisingly, free ZPI was also susceptible to inactivation by oxidized membrane vesicles in the absence of calcium. Oxidized vesicles containing both Phosphatidylserine and polyunsaturated fatty acids were required to promoteinactivation of theZPI-PZcomplexor free ZPI, indicating that binding of thePZ-complexedor freeZPIto peroxide-modified phospholipid vesicles mediates the inactivation. Heparin protected the ZPI-PZ complex and free ZPI from inactivation, suggesting that blocking the heparin-binding site on ZPI interferes with ZPI binding to lipid or to PZ. This was confirmed by direct lipid-binding experiments. Native PAGE indicated that oxidization induced dissociation of the ZPI-PZ complex and increased the negative charge of ZPI. We conclude that compromised ZPI anticoagulant function could contribute to thrombus initiation and growth in oxidative stress-induced cardiovascular diseases.