Decorin and biglycan are closely related abundant extracellular matrix proteoglycans that have been shown to bind to C1q. Given the overall structural similarities between C1q and mannose-binding lectin (MBL), the two key recognition molecules of the classical and the lectin complement pathways, respectively, we have examined functional consequences of the interaction of C1q and MBL with decorin and biglycan. Recombinant forms of human decorin and biglycan bound C1q via both collagen and globular domains and inhibited the classical pathway. Decorin also bound C1 without activating complement. Furthermore, decorin and biglycan bound efficiently to MBL, but only biglycan could inhibit activation of the lectin pathway. Other members of the collectin family, including human surfactant protein D, bovine collectin-43, and conglutinin also showed binding to decorin and biglycan. Decorin and biglycan strongly inhibited C1q binding to human endothelial cells and U937 cells, and biglycan suppressed C1q-induced MCP-1 and IL-8 production by human endothelial cells. In conclusion, decorin and biglycan act as inhibitors of activation of the complement cascade, cellular interactions, and proinflammatory cytokine production mediated by C1q. These two proteoglycans are likely to down-regulate proinflammatory effects mediated by C1q, and possibly also the collectins, at the tissue level.