Bacterial lipopolysaccharide (LPS)-induced exocytosis of granular hemocytes is a key component of the horseshoe crab's innate immunity to infectious microorganisms; stimulation by LPS induces the secretion of various defense molecules from the granular hemocytes. Using a previously uncharacterized assay for exocytosis, we clearly show that hemocytes respond only to LPS and not to other pathogen-associated molecular patterns, such as beta-1,3-glucans and peptidoglycans. Furthermore, we show that a granular protein called factor C, an LPS-recognizing serine protease zymogen that initiates the hemolymph coagulation cascade, also exists on the hemocyte surface as a biosensor for LPS. Our data demonstrate that the proteolytic activity of factor C is both necessary and sufficient to trigger exocytosis through a heterotrimeric GTP-binding protein-mediating signaling pathway. Exocytosis of hemocytes was not induced by thrombin, but it was induced by hexapeptides corresponding to the tethered ligands of protease-activated G protein-coupled receptors (PARs). This finding suggested the presence of a PAR-like receptor on the hemocyte surface. We conclude that the serine protease zymogen on the hemocyte surface functions as a pattern-recognition protein for LPS.