Factor D (C3 proactivator convertase) of human serum has been shown to be absolutely necessary for alternative pathway function, for activation of the C3/C5 convertase of that pathway and not to be a subunit of this enzyme. Factor D was found to be present in human plasma in active form only, at a concentration of 2 microgram/ml, and not to be controlled by plasma protease inhibitors or by spontaneous decay. Unlike trypsin, factor D cleaves and activates factor B only when it is in Mg++-dependent complex with C3b, has no esterolytic activity, and is unable to cleave the B chain of insulin. The alleged functional and antigenic relationship of factor D to alpha-thrombin could not be verified. The results of this study led to the description of the mechanism of action of factor D in terms of the cryptic site hypothesis.