In this study, a peptide of 34 amino acids from the Mr 40,000 C terminus alpha-chain fragment of C3 was found to mediate properdin (P) binding. Treatment of the Mr 40,000 fragment with CNBr generated one major Mr 17,000 fragment that was capable of binding P. Amino acid sequence data placed the Mr 17,000 fragment within residues 1385 to 1540 of the C3 sequence. After analyzing this sequence for highly conserved segments within the C3 from other species (which bind P) and segments of low similarity within human C4, mouse C5, and alpha 2-macroglobulin (which do not bind P), a 34-amino acid (1402 to 1435) peptide was synthesized. This synthetic peptide bound to P and inhibited its binding to C3b. In addition, it exhibited negative regulatory activity on the alternative pathway as it inhibited the lysis of rabbit erythrocytes by normal human serum. These results show that the P-binding site is located within the residues 1402 to 1435 of the C3 sequence.