The endothelium of the rabbit thoracic aorta was removed from the vessel wall by one of two procedures, and the freshly exposed subendothelial surface was used for <sup>125</sup>I-antithrombin III binding studies. Pretreatment of the subendothelium with either heparitinase or thrombin diminished the uptake of <sup>125</sup>I-antithrombin III by up to 80%, whereas pretreatment with plasmin, hyaluronidase or FPR thrombin had little effect. Moφhometric analysis of the subendothelium from enzyme-treated and -untreated tissues showed that, whereas plasmin, thrombin and heparitinase each caused a dramatic reduction of the large proteoglycan granules of the extracellular matrix, only exposure to heparitinase and thrombin caused a reduction in the small proteoglycans which populate the basement membrane of smooth muscle cells. Of the subendothelium-bound <sup>125</sup>I-antithrombin III, more than 80% was efficiently removed by excess thrombin or by excess heparin. Evidence was obtained for the formation of high molecular weight thrombin-antithrombin III complexes. We conclude that antithrombin III binds largely to proteoheparan sulphate located in the basement membrane of the intimal smooth muscle cells for the purpose of inactivating certain proteases which arise during haemostatic change.