During incubation of ZXd2, an insoluble intermediate of the properdin system, with properdin factors D and B a complex forms, designated ZX, which cleaves purified C3. Factor D is replaceable in this system by proteolytic enzymes, e.g., trypsin, pronase or plasmin. ZX formation with ZXd2, factor B and factor D or trypsin requires the presence of Mg++. ZX complexes formed either with factor D or with trypsin are identical with respect to their stability in the absence of divalent cations and with respect to the decay of the C3-cleaving enzymes. From the data obtained with proteolytic enzymes it is concluded that factor D acts as a protease in the formation of ZX. Sequential studies of ZX formation revealed that factor B binds reversibly to ZXd2 in the presence of Mg++. The resulting ZXd2 B complex was found to acquire enzymatic activity against C3 after treatment with factor D or trypsin. Our data suggest that in the ZXd2 system two steps are involved in ZX formation, namely binding of factor B to a receptor on ZXd2, probably C3b, which occurs only in the presence of Mg++, and subsequent proteolytic activation of this complex which is Mg++-independent.