Compstatin is a 13-residue cyclic peptide that inhibits complement activation by binding to complement component, C3. Although the activity of compstatin has been improved severalfold using combinatorial and rational design approaches, the molecular basis for its interaction with C3 is not yet fully understood. In the present study, isothermal titration calorimetry was employed to dissect the molecular forces that govern the interaction of compstatin with C3 using four different compstatin analogs. Our studies indicate that the C3-compstatin interaction is an enthalpy-driven process. Substitution of the valine and histidine residues at positions 4 and 9 with tryptophan and alanine, respectively, resulted in the increase of enthalpy of the interaction, thereby increasing the binding affinity for C3. The data also suggest that the interaction is mediated by water molecules. These interfacial water molecules could be the source for unfavorable entropy and large negative heat capacity changes observed in the interaction. Although part of the negative heat capacity changes could be accounted for by the water molecules, the rest might be resulting from the conformational changes in C3 and/or compstatin up on binding. Finally, we propose based on the pK(a) values determined from the protonation studies that histidine on compstatin participates in protonation changes and contributes to the specificity of the interaction between compstatin and C3. These protonation changes vary significantly between the binding of different compstatin analogs to C3.