Factor B is a serine protease, essential for the function of the alternative pathway of complement activation. To study further the importance of the alternative pathway of complement activation in vivo and to help elucidate any additional functions of factor B or its activation fragments we developed, by homologous recombination in embryonic stem cells, mice with a disrupted factor B gene. Factor B-deficient mice produced no detectable factor B mRNA or protein and had no detectable factor B enzymatic activity or alternative pathway function in their serum. Further studies revealed that the two adjacent genes, complement component C2 and D17H6S45, had been down regulated as a result of the disruption. The down-regulation of C2 gene expression was sufficient to cause a complete loss of classical pathway function as determined by the failure of sera from the deficient mice to opsonize antibody-sensitized sheep erythrocytes and by impairment of immune complex processing in vivo. The resulting mouse is deficient in both factor B and C2, and hence the alternative and classical pathways of complement activation, and adds to the repertoire of models for studying the in vivo role of complement in the immune system.