Protein C is a plasma protease that when activated plays a central role in modulating the function of the vascular endothelium and its interface with the innate immune system. A recombinant form of human activated protein C (APC), drotrecogin alfa (activated), has shown efficacy in a number of preclinical models of thrombosis and ischemia and reduces mortality in patients that have a high risk of dying from severe sepsis. Studies have begun to elucidate the mechanism for the multifunctional role of APC in modulating not only coagulation, but also inflammation and apoptotic processes. From gene profiling to pharmacology studies, drotrecogin alfa (activated) appears to directly modulate endothelial dysfunction by blocking cytokine signaling, functional cell adhesion expression, vascular permeability and preventing the induction of apoptosis. Moreover, APC, via endothelial protein C receptor/protease activated receptor-1 mediated mechanisms, also appears to directly modulate leukocyte migration and adhesion. The ability of APC to suppress pro-inflammatory pathways and enhance cellular survival suggests that APC has a role in the adaptive response at the vessel wall, in which it protects the wall from vascular insult and prolongs endothelial, cellular, and organ survival. The emerging data further suggest that APC effectively modulates the complex changes that occur during multi-system activation and dysfunction in sepsis.