Isolated C2 and C2i preparations were able to hydrolyze a number of synthetic esters containing basic amino acids, among which N-alpha-acetylglycyl-L-lysine methyl ester (AcGlyLysOMe) was most susceptible. The cleaving activity was a property of the C2 molecule, since it correlated with the presence of C2 on analyses of C2 preparations by ultracentrifugation in sucrose gradients, filtration through Sephadex G-200 columns, and on electrophoresis in acrylamide gels. Furthermore, acrylamide gel electrophoretic studies showed a shift in hydrolytic activity from the position occupied by C2 to that characteristic of C2i after incubation of C2 with C1s. The action was enzymatically mediated as evidenced by a bell-shaped pH activity curve, a linear dependence on C2 concentration, and the presence of Michaelis-Menten kinetics. The Michaelis constant for cleavage of AcGlyLysOMe by C2 was 1.8 X 10(-2) mol. Cleavage of C2 by C1s increased C2 enzymatic activity, yet chemical oxidation of the molecule, although enhancing hemolytic acitivity, failed to increase C2 hydrolytic activity. The observed enzymatic activity of C2 was found to be relevant to the function of C2 in the C42 complex, since AcGlyLysOMe competitively inhibited the C42 mediated cleavage of C3 in free solution and the C42 dependent binding of C3 to cells.