Accumulation of low-density lipoprotein (LDL)-derived cholesterol by artery wall macrophages triggers atherosclerosis, the leading cause of cardiovascular disease. Conversely, high-density lipoprotein (HDL) retards atherosclerosis by promoting cholesterol efflux from macrophages by the membrane-associated ATP-binding cassette transporter A1 (ABCA1) pathway. HDL has been proposed to lose its cardioprotective effects in subjects with atherosclerosis, but the underlying mechanisms are poorly understood. One potential pathway involves oxidative damage by myeloperoxidase (MPO), a heme enzyme secreted by human artery wall macrophages. We used mass spectrometry to demonstrate that HDL isolated from patients with established cardiovascular disease contains elevated levels of 3-chlorotyrosine and 3-nitrotyrosine, two characteristic products of MPO. When apolipoprotein A-I (apoA-I), the major HDL protein, was oxidized by MPO, its ability to promote cellular cholesterol efflux by ABCA1 was impaired. Moreover, oxidized apoA-I was unable to activate lecithin:cholesterol acyltransferase (LCAT), which rapidly converts free cholesterol to cholesteryl ester, a critical step in HDL maturation. Biochemical studies implicated tyrosine chlorination and methionine oxygenation in the loss of ABCA1 and LCAT activity by oxidized apoA-I. Oxidation of specific residues in apoA-I inhibited two key steps in cholesterol efflux from macrophages, raising the possibility that MPO initiates a pathway for generating dysfunctional HDL in humans.