Chemical modifications have demonstrated that the ultraviolet difference spectrum produced when heparin interacts with antithrombin III is due primarily to changes in the tryptophan environment. This is based on the observation that this spectrum could be abolished by treatment of antithrombin III with dimethyl (2-hydroxy-5-nitrobenzyl) sulfonium bromide but not with tetranitromethane. The tryptophan-modified antithrombin III is still capable of binding to thrombin even when it has lost 85% of heparin cofactor activity. A marked decrease in reactivity of tryptophan residues is observed when modification is carried out in the presence of heparin. Evidence is presented that tryptophan is in the heparin binding site.