The human factor H‐like protein 1 (FHL‐1) is composed of seven repetitive elements (short consensus repeats; SCR) that are identical in sequence to the seven N‐terminal SCR of complement factor H. We show that the FHL‐1 protein has decay acceleration activity in that it can dissociate C3/C5‐convertases bound to the surface of sheep red blood cells. The same activity was also determined for factor H. However, compared to FHL‐1, factor H was more efficient in decay acceleration, as about 100‐fold less protein was required for a 50% inhibition of activity. The domain required for decay accelerating activity of FHL‐1 and factor H was mapped by the use of recombinant fragments. FHL‐1 and a series of truncated forms of the protein were expressed in the baculovirus system. Recombinant FHL‐1 and all mutants which include SCR 1–4 were functionally active. These four N‐terminal SCR are essential and sufficient for activity, as deletion mutants which lack SCR 1 or SCR 4 showed no activity. These results demonstrate that FHL‐1 and factor H have identical and overlapping regulatory functions in the complement system and that the domain required for this activity is located in the overlapping region of both proteins within the N‐terminal four SCR.