We recently described the isolation from human serum of a high molecular weight protein with specific binding affinity for fluid-phase activated C4. We show here that the C4-binding protein (C4-Bp) functions as an essential cofactor in the proteolysis of C4b in the presence of C3b-inactivator (C3bINA). C4-bp, together with C3bINA, cleave the alpha'-chain of C4b into three fragments called alpha2, alpha3, and alpha4, with mol wt of 47,000, 25,000, and 17,000 daltons, respectively. The alpha2 fragment was dissociated from C4b without reduction, whereas the alpha3 and alpha4 fragments were disulfide bonded the other chains of C4b. The reaction did not occur when either C4-bp or C3bINA were omitted, nor in the presence of either protein in combination with beta1H. Native C4 was not affected by C3bINA aand C4-bp. C4b was not cleaved when incubated in serum of a patient with genetic deficiency of C3bINA. However, when purified C3bINA was added, the alpha'-chain of C4b was cleaved and fragments with the same molecular weight as alpha2, alpha3, and alpha4 were generated.