The goal is to provide an extensive review of the physiologic role of thrombomodulin (TM) in maintaining vascular homeostasis, with a focus on its anti-inflammatory properties. Data were collected from published research. TM is a transmembrane glycoprotein expressed on the surface of all vascular endothelial cells. Expression of TM is tightly regulated to maintain homeostasis and to ensure a rapid and localized hemostatic and inflammatory response to injury. By virtue of its strategic location, its multidomain structure and complex interactions with thrombin, protein C (PC), thrombin activatable fibrinolysis inhibitor (TAFI), complement components, the Lewis Y antigen, and the cytokine HMGB1, TM exhibits a range of physiologically important anti-inflammatory, anti-coagulant, and anti-fibrinolytic properties. TM is an essential cofactor that impacts on multiple biologic processes. Alterations in expression of TM and its partner proteins may be manifest by inflammatory and thrombotic disorders. Administration of soluble forms of TM holds promise as effective therapies for inflammatory diseases, and infections and malignancies that are complicated by disseminated intravascular coagulation.