Previous studies have shown that hepsin is a putative membrane-associated serine protease that is required for cell growth (Torres-Rosado, A., O'Shea, K. S., Tsuji, A., Chou, S.-H., and Kurachi, K. (1993) Proc. Natl. Acad. Sci. U.S. A. 90, 7181 7185). In the present study, we have transfected baby hamster kidney (BHK) cells with a plasmid containing the cDNA for human hepsin and examined these cells for their ability to activate several blood coagulation factors including factors X, IX, VII, prothrombin, and protein C. Little, if any, proteolytic activation of factors X, IX, prothrombin, or protein C was observed when these clotting factors were incubated with hepsin-transfected cells. On the other hand, hepsin-transfected cells proteolytically activated significant concentrations of human factor VII in a time- and calcium-dependent manner, whereas essentially no activation of factor VII was observed in BHK cells transfected with plasmid lacking the cDNA for hepsin. The factor VII activating activity in the hepsin-transfected BHK cell line was confined exclusively to the total membrane fraction and was inhibited > 95% by antibody raised against a fusion protein consisting of maltose-binding protein and the extracellular domain of human hepsin. An active site factor VII mutant, S344A factor VII, was cleaved as readily as plasma-derived factor VII by hepsin-transfected cells, indicating that factor VII was not converted to factor VIIa autocatalytically on the cell surface. In contrast, an activation cleavage site factor VII mutant, R152E factor VII, was not cleaved by hepsin-transfected cells, suggesting that factor VII and S344A factor VII were activated on these cells by cleavage of the Arg152-Ile153 peptide bond. In the copresence of factor VII and factor X, hepsin-transfected BHK cells supported the formation of factor Xa. In addition, in the copresence of factor VII, factor X, and prothrombin, hepsin-transfected BHK cells supported the formation of thrombin. These results strongly suggest that membrane-associated hepsin converts zymogen factor VII to factor VIIa, which in turn, is capable of initiating a coagulation pathway on the cell surface that ultimately leads to thrombin formation.