The inactivation of plasminogen activator inhibitor-1 (PAI-1) by the small molecule PAI-1 inhibitor PAI-039 (tiplaxtinin) has been investigated using enzymatic analysis, direct binding studies, site-directed mutagenesis, and molecular modeling studies. Previously PAI-039 has been shown to exhibit in vivo activity in various animal models, but the mechanism of inhibition is unknown. PAI-039 bound specifically to the active conformation of PAI-1 and exhibited reversible inactivation of PAI-1 in vitro. SDS-PAGE indicated that PAI-039 inactivated PAI-1 predominantly through induction of PAI-1 substrate behavior. Preincubation of PAI-1 with vitronectin, but not bovine serum albumin, blocked PAI-039 activity while analysis of the reciprocal experiment demonstrated that preincubation of PAI-1 with PAI-039 blocked the binding of PAI-1 to vitronectin. Together, these data suggest that the site of interaction of the drug on PAI-1 is inaccessible when PAI-1 is bound to vitronectin and may overlap with the PAI-1 vitronectin binding domain. This was confirmed by site-directed mutagenesis and molecular modeling studies, which suggest that the binding epitope for PAI-039 is localized adjacent to the previously identified interaction site for vitronectin. Thus, these studies provide a detailed characterization of the mechanism of inhibition of PAI-1 by PAI-039 against free, but not vitronectin-bound PAI-1, suggesting for the first time a novel pool of PAI-1 exists that is vulnerable to inhibition by inactivators that bind at the vitronectin binding site.