We have investigated the mechanism of cleavage of C4b into C4c and C4d by the C3b inactivator (C3bINA) and revealed the formation of a nicked form of C4b as an intermediate cleavage product. The cleavage of C4b by the C3bINA was a two-step reaction. The first cleavage occurred on the alpha-chain (89,000 daltons) yielding two fragments, 73,000 daltons and 16,000 daltons. These fragments were bound to each other or to the beta or gamma chain through disulfide linkages. Therefore, an altered form of C4b, C4b', consisting of four disulfide-linked polypeptide chains with the same m.w. as C4b, was produced as an intermediate cleavage product. Subsequently, the second cleavage occurred on the alpha-chain fragment of 73,000 daltons to produce the two generally recognized fragments, C4c and C4d. In both cleavage reactions, a high m.w. cofactor protein, C4bC3bINACo, which is the same protein described as the C4 binding protein, was required, suggesting that both of the proteolytic processes are catalyzed by the C3bINA.