The physicochemical properties of recombinant wild type and three site-directed mutants of apolipoprotein C-III (apoC-III), designed by molecular modeling to alter specific amino acid residues implicated in lipid binding (L9T/T20L, F64A/W65A) or LPL inhibition (K21A), were compared. Relative lipid binding efficiencies to dimyristoylphosphatidylcholine (DMPC) were L9T/T20L > WT >K21A > F64A/W65A with an inverse correlation with size of the discoidal complexes formed. Physicochemical analysis (Trp fluorescence, circular dichroism, and GdnHCl denaturation) suggests that L9T/T20L forms tighter and more stable lipid complexes with phospholipids, while F64A/W65A associates less tightly. Lipid displacement properties were tested by gel-filtrating apoE:dipalmitoylphosphatidylcholine (DPPC) discoidal complexes mixed with the various apoC-III variants. All apoC-III proteins bound to the apoE:DPPC complexes; the amount of apoE displaced from the complex was dependent on the apoC-III lipid binding affinity. All apoC-III proteins inhibited LPL in the presence or absence of apoC-II, with F64A/W65A displaying the most inhibition, suggesting that apoC-III inhibition of LPL is independent of lipid binding and therefore of apoC-II displacement. Taken together. these data suggest that the hydrophobic residues F64 and W65 are crucial for the lipid binding properties of apoC-III and that redistribution of the N-terminal helix of apoC-III (L9T/T20L) enhances the stability of the lipid-bound protein, while LPL inhibition by apoC-III is likely to be due to protein:protein interactions.