The serine protease factor Xa (FXa) is inhibited by ecotin with picomolar affinity. The structure of the tetrameric complex of ecotin variant M84R (M84R) with FXa has been determined to 2.8 A. Substrate directed induced fit of the binding interactions at the S2 and S4 pockets modulates the discrimination of the protease. Specifically, the Tyr at position 99 of FXa changes its conformation with respect to incoming ligand, changing the size of the S2 and S4 pockets. The role of residue 192 in substrate and inhibitor recognition is also examined. Gln 192 from FXa forms a hydrogen bond with the P2 carbonyl group of ecotin. This confirms previous biochemical and structural analyses on thrombin and activated protein C, which suggested that residue 192 may play a more general role in mediating the interactions between coagulation proteases and their inhibitors. The structure of ecotin M84R-FXa (M84R-FXa) also reveals the structure of the Gla domain in the presence of Mg(2+). The first 11 residues of the domain assume a novel conformation and likely represent an intermediate folding state of the domain.