Decay-accelerating factor (DAF) is a 70,000 Mr membrane protein that inhibits amplification of the complement cascade on the cell surface, and protects cells from damage. Purified DAF can be reincorporated into the membrane of red cells and is functional. DAF is deficient in paroxysmal nocturnal hemoglobinuria (PNH), a disease characterized by increased sensitivity of erythrocytes to complement lysis. We show here that DAF is part of a newly described family of membrane proteins anchored to the lipid bilayer by means of phosphatidylinositol (PI). Treatment with PI-specific phospholipase C (PIPLC) releases 70-80, 60, and 10% of cell surface DAF from mononuclear cells, neutrophils, and erythrocytes, respectively. The PIPLC-released DAF (DAF-S) is slightly smaller (67,000 Mr) than the membrane form. DAF and DAF-S cannot be distinguished antigenically. Furthermore, DAF-S has lost its ability to significantly inhibit the C3-convertase, as well as its ability to incorporate into cell membranes. Since DAF can only inhibit C3-convertase endogenously, i.e., within the membrane of the same cell, it is likely that the loss of activity of DAF-S is causally related to its inability to reincorporate in the lipid bilayer. As shown by others, the complement-sensitive red cells from PNH patients lack acetylcholinesterase, which is also anchored to the membrane by PI (9). Thus it is possible that the molecular defect in PNH lies in the biosynthetic pathways leading to the attachment of PI to the polypeptide chains, in the transport of these proteins to the surface, or in their release by the action of endogenous phospholipases. From a practical standpoint the specific release of DAF by PIPLC could facilitate killing of tumor cells by amplifying the effects of the complement cascade on the surface of antibody-sensitized cells.