The mechanism by which heparin inhibits the alternative complement pathway (ACP) by a fluid-phase activator, CoVF, has been studied. Results presented here indicate that heparin's major (rate-limiting) effect on the fluid-phase activation of the ACP was to potentiate Factor H activity. Such an effect results in a very efficient inhibition of C3b and C3bBb function and restriction of subsequent complement activation and hemolytic activity. Evidence was obtained to indicate that soluble heparin H shifted anodally. Assuming that the rate-limiting inhibitory effect of heparin is to potentiate Factor H, then C3-converting complexes such as CoVF-Bb, which do not require C3b for activity, should not be effected by heparin. Indeed, the inhibitory effect of heparin on C3 conversion in EGTA-Mg2+ serum-CoVF mixtures was lost with a prolonged incubation time (i.e. 60-90 min at 37 C). This finding indicated that with time ACP-mediated cleavage of C3 was able to bypass the heparin-mediated inhibitory step. From these studies it is suggested that heparin restricts the C3-converting activity due to soluble C3bBb complexes but not the C3 conversion due to CoVF-Bb complexes. Heparin-mediated restriction of the ACP activation by CoVF was used to calculate the relative percentages of C3 conversion due to C3bBb or CoVF-Bb complexes. In carefully controlled experiments, heparin could not prevent the spontaneous conversion of C3 which occurs upon removing functional Factor H from the sera. Addition of isolated Factor H restored heparin's inhibitory effect on the ACP. Kinetic studies of heparin's inhibition of ACP-mediated lysis of rabbit erythrocytes indicated that heparin's inhibitor functions did not occur until after the addition of an ACP activator. Each of these findings is consistent with the postulate that the major (rate-limiting) effect of heparin on the ACP is to potentiate the function of Factor H on activated C3b.