Human lipoprotein lipase (LPL) monomer consists of two domains, a larger NH2-terminal domain that contains catalytic residues and a smaller COOH-terminal domain that modulates substrate specificity and is a major determinant of heparin binding. Analyses of NH2-terminal domain function were performed after site-directed mutagenesis of the putative active-site serine residue, while COOH-terminal domain function was assessed following reaction with a monoclonal antibody. The native enzyme and mutant LPL in which serine 132 was replaced with alanine, cysteine, or glycine were transiently expressed in COS-7 cells. Mutant proteins were synthesized and secreted at levels comparable to native LPL; however, none of the mutants retained enzymatic activity. The mutant with alanine replacing serine 132 was purified and shown to be inactive with both esterase and lipase substrates; however, binding to a 1,2-didodecanoyl-sn-glycero-3-phosphatidylcholine monolayer was comparable to native LPL. These results are consistent with a catalytic, and not a lipid binding, role for serine 132. To investigate the function of the smaller COOH-terminal domain, LPL lipolytic and esterolytic activities as well as heparin binding properties were determined after reaction with a monoclonal antibody specific for this domain. Lipolytic activity was inhibited by the monoclonal antibody, whereas esterolytic activity was only marginally affected, indicating that the LPL COOH-terminal domain is required for lipolysis, perhaps by promoting interaction with insoluble substrates. Also, the affinity of antibody-reacted LPL for heparin was not significantly different from that of LPL alone, suggesting that (i) the heparin-binding site is physically distinct from the COOH-terminal domain region required for lipolysis and (ii) binding of antibody did not cause dimer dissociation. A model is proposed for the two LPL domains fulfilling different roles in the lipolytic process.