Complement receptor type 2 (CD21, CR2), the receptor for the C3 fragment C3dg, activates complement via the alternative pathway and also serves as a preferential acceptor site for C3 fragments. The molecular basis for this phenomenon, which has recently been demonstrated for B lymphocytes in vivo, is currently not understood. Here we present a model for this CR2-dependent complement activation. The inactive C3 (iC3), which forms spontaneously in serum in low amounts by reaction of native C3 with H2O, binds noncovalently to the N-terminal part of CR2. Subsequent association of properdin and factor B, and cleavage of factor B by factor D lead to formation of a C3 convertase associated with CR2, thus focussing covalent C3 deposition to CR2 itself. This model is supported by the following experimental findings. 1) By FACS analysis and radioreceptor assays we showed that iC3, properdin, and factor B bound to CR2 on Raji B cells, MT2 T cells, and peripheral blood B cells. 2) Both binding of these proteins and complement activation by CR2-expressing cells were reduced in parallel by Abs against CR2. 3) 125I-labeled C3b was covalently deposited on CR2, when hemolytically active 125I-labeled C3 was added to Raji cells preincubated with iC3, factor B, properdin, and factor D, thus proving functionality of CR2-bound C3 convertase. This model of C3 convertase activity formed on CR2 domains inaccessible for decay-accelerating factor offers an explanation for the deposition of C3 found on CR2-expressing cells.