Purified C4-binding protein (C4-bp) was shown to bind to cell-bound C4b by radioactive tracer techniques. With EAC4 bearing greater than 3,000 C4b-molecules/cell, the number of C4-bp molecules bound was directly proportional to the number of C4b molecule on the cell surface; EAC4 bearing less than 3,000 C4b-molecules/cell bound a very small amount of C4-bp. Scatchard analysis of binding of C4-bp indicated an equilibrium constant of 4.6 X 10(8) L/M and a maximum of 0.43 C4-bp molecules bound per C4b molecule, equivalent to an average of one molecule of C4-bp per two or three molecules of C4b. Fluid-phase C4b inhibited the binding of C4-bp to cell-bound C4b in a dose-dependent manner, whereas native C4 had little effect. C2 inhibited this binding and also released C4-bp from EAC4,C4-bp. However, C2 was 27 times less effective than unlabeled C4-bp on a molar basis and a considerable amount of C4-bp remained bound to C4b on the cell surface even in the presence of a large excess of C2. We also examined the cofactor activity of C4-bp in the cleavage of cell-bound C4b by C3b/C4b inactivator (I). Cleavage of the alpha' chain of C4b on the cell surface by I alone was incomplete and an intermediate cleavage product, alpha-75, was observed. When C4-bp bound to C4b on the cell surface, the alpha' chain of the C4b cleaved into three fragments, alpha 2, alpha 3, and alpha 4. The alpha 3, alpha 4, beta, and gamma peptides (C4c) were released into the fluid phase, and the alpha 2 fragment (C4d) remained linked covalently to the cell membrane via an ester bond. In some situations, therefore, C4-bp enhances the proteolytic activity of I on cell-bound C4b.