The binding of 125I-C1q to anionic liposomes was studied as a function of protein concentration, pH, ionic strength, and anionic lipid composition. The maximum amount of protein bound per micromole of lipid was very sensitive to electrostatic factors, increasing strongly with decreased pH and ionic strength or increased anionic lipid content. The apparent association constant was independent of these electrostatic factors, however, in marked contrast to studies on basic peptide binding to anionic lipid vesicles. Microscopic observations of large unilamellar liposomes containing fluorescently labeled C1q or phosphatidylglycerol demonstrated, under conditions causing strong electrostatic interactions, that C1q and anionic lipids colocalized into domains whose radii of curvature were higher than that of the surrounding lipid. These domains were observed to bud and pinch off into brightly fluorescent vesicles. We propose a model for all of these observations in which the line tension or edge energy at the boundary of the domain resists its increase in circumference as the domain grows by electrostatic effects on binding, eventually resulting in vesiculation. We propose that under favorable electrostatic conditions, as larger domains form the edge energy balances the increases in the electrostatic contribution to binding, resulting in a net binding energy independent of electrostatic factors.