The human factor H-like protein 1 (FHL-1) is composed of seven repetitive domains (short consensus repeats; SCRs) that are identical in sequence to the seven NH2-terminal SCRs of the complement regulatory protein factor H. We have identified the native FHL-1 protein as a 42-kDa human plasma protein by immunoblotting and by comparing the mobility to that of a recombinant FHL-1 protein. Here, we demonstrate the existence of two distinct co-migrating human plasma proteins that represent the 42-kDa FHL-1 protein and the previously identified 43-kDa factor H-related 1 beta protein. Similar to factor H, the recombinant FHL-1 protein displays cofactor activity in factor I-mediated cleavage of C3b. To identify relevant SCRs of factor H and FHL-1, we recombinantly expressed the domains shared between the two proteins in the baculovirus expression system. Recombinant FHL-1 and all truncated forms that include SCRs 1 to 4 displayed cofactor activity. All four NH2-terminal SCRs are essential, as deletion mutants composed of SCR 1 and 4 only; of SCRs 1, 2, and 4 only, or of SCRs 1, 3, and 4 only were functionally inactive. Similarly, the distance between these individually folding domains is critical for function, as a recombinant protein that had two and four amino acids inserted between SCRs 1 and 2 or between SCRs 3 and 4, respectively, had no activity. These results demonstrate that all four NH2-terminal SCRs of FHL-1 (and of factor H) are required for cofactor activity in factor I-mediated cleavage of C3b, and that the distance between these SCRs is essential.