Factor B is the zymogen of the catalytic site bearing subunit Bb of the C3/C5 convertase of the alternative pathway of complement. In this study, the location of the C3b binding site and the catalytic site within the Bb subunit were investigated. When human Factor B was treated with porcine elastase, fragments with respective molecular weights of 36,000, 35,000, 33,000, 31,000, and 25,000 were generated. Binding studies showed that only the 33,000-dalton fragment was capable of binding to C3b. The 33,000-dalton fragment was purified using fast protein liquid chromatography and found to be part of the Bb fragment upon testing with monoclonal antibody 15-6-19-1. Amino-terminal amino acid sequence analysis of the 33,000-dalton fragment placed it in the C-terminal half of Bb. The fragment expressed esterolytic activity as evidenced by cleavage of the synthetic substrate N alpha-acetyl-glycyl-L-lysine methyl ester and restored alternative pathway activity in Factor B-depleted serum. Its hemolytic activity was approximately 60-fold lower than that of Factor B. Comparative binding studies in the presence of metal ions using zymosan-C3b showed that the 33,000-dalton fragment bound to C3b with higher affinity than Factor B. Addition of the fragment to human serum inhibited alternative pathway activation by rabbit erythrocytes due to its high affinity for C3b and its low hemolytic activity compared to Factor B. These results show that the C-terminal 33,000-dalton portion of Bb contains not only the enzymatic site of Bb but also a C3b binding site which confers hemolytic activity upon the fragment. The observation that the fragment inhibited alternative pathway activation suggests that a synthetic peptide may be constructed that exhibits negative regulator activity in the alternative pathway.