Heparin cofactor II (HCII) is a plasma protein that inhibits thrombin when bound to dermatan sulfate or heparin. HCII-deficient mice are viable and fertile but rapidly develop thrombosis of the carotid artery after endothelial injury. We now report the effects of HCII deficiency on atherogenesis and neointima formation. HCII-null or wild-type mice, both on an apolipoprotein E-null background, were fed an atherogenic diet for 12 weeks. HCII-null mice developed plaque areas in the aortic arch approximately 64% larger than wild-type mice despite having similar plasma lipid and glucose levels. Neointima formation was induced by mechanical dilation of the common carotid artery. Thrombin activity, determined by hirudin binding or chromogenic substrate hydrolysis within 1 hour after injury, was higher in the arterial walls of HCII-null mice than in wild-type mice. After 3 weeks, the median neointimal area was 2- to 3-fold greater in HCII-null than in wild-type mice. Dermatan sulfate administered intravenously within 48 hours after injury inhibited neointima formation in wild-type mice but had no effect in HCII-null mice. Heparin did not inhibit neointima formation. We conclude that HCII deficiency promotes atherogenesis and neointima formation and that treatment with dermatan sulfate reduces neointima formation in an HCII-dependent manner.