Three truncated fragments, harboring different sushi domains, namely, sushi123, sushi1, and sushi3 domains, of Factor C were produced as biologically active secreted recombinant proteins. Sushi1 and 3 each has a high-affinity LPS binding site with K:(d) of 10(-9) to 10(-10) M. Positive cooperativity in sushi123 resulted in a 1000-fold increase in K:(d)2. The core LPS binding region of sushi1 and 3 reside in two 34-mer peptides, S1 and S3. A rigidly held disulfide-bonded structure is not essential but is important for LPS binding, as confirmed by a 100- to 10000-fold decrease in affinity. Both S1 and S3 can inhibit LAL reaction and LPS-induced hTNF-alpha secretion with different potency. LAL assay revealed that at least two molecules of S1 bind cooperatively to one LPS molecule, with Hill's coefficient of 2.42. The LPS binding by S3 is independent and noncooperative. The modified SDelta1 and SDelta3 peptides exhibited increased LPS neutralization potential although its LPS binding affinities indicated only a 10-fold improvement. Hence, the structural difference of the four sushi peptides conferred different efficiencies in LPS neutralization without altering their binding affinity for LPS. Circular dichroism spectrometry revealed that the four peptides underwent conformational change in the presence of lipid A, transitioning from a random coil to either an alpha-helical or beta-sheet structure. Two factors are critical for the sensitivity of Factor C to LPS: 1) the presence of multiple binding sites for LPS on a single Factor C molecule; and 2) high positive cooperativity in LPS binding. The results showed that in the design of an improved LPS binding and neutralizing peptide, charge balance of the peptide is a critical parameter in addition to its structure.