Decay-accelerating factor (DAF) is a glycosylphosphatidylinositol-anchored membrane protein that restricts complement activation on autologous cells. Previous studies have established a significant protective activity of DAF in the MRL/lpr murine model of human systemic lupus erythematosus. To dissect the mechanism of protection by DAF in this disease model, we evaluated the effect of C3 gene ablation on disease development in MRL/lpr-Daf-1^−/− mice. We found no significant difference in lymphadenopathy, splenomegaly, or anti-chromatin autoantibody titer between complement-sufficient and complement-deficient MRL/lpr-Daf-1^−/− mice. On the other hand, complement deficiency strikingly reduced the incidence and severity of dermatitis in MRL/lpr-Daf-1^−/− mice. To assess the contribution of DAF expression on lymphocytes versus local tissues in suppressing dermatitis, we generated BM chimeric mice between MRL/lpr-Daf-1^−/− and MRL/lpr-Daf-1^+/+ mice. Compared with MRL/lpr-Daf-1^−/− → MRL/lpr-Daf-1^−/− controls, MRL/lpr-Daf-1^−/− → MRL/lpr-Daf-1^+/+ chimeras developed significantly attenuated dermatitis, suggesting that the protective effect of DAF in suppressing dermatitis is primarily attributable to its local expression. We conclude that DAF works as a complement regulator in the skin to protect MRL/lpr mice from skin inflammation, whereas its inhibitory role in the induction phase of MRL/lpr autoimmunity is complement-independent. Together, these results reveal multiple mechanisms of action for DAF in ameliorating systemic autoimmunity.