The plasma protein C3 is a central element in the activation and effector functions of the complement system. A hereditary dysfunction of C3 that prevents complement activation via the alternative pathway (AP) was described previously in a Swedish family, but its genetic cause and molecular consequences have remained elusive. In this study, we provide these missing links by pinpointing the dysfunction to a point mutation in the β-chain of C3 (c.1180T > C; p.Met373Thr). In the patient's plasma, AP activity was completely abolished and could only be reconstituted with the addition of normal C3. The M373T mutation was localized to the macroglobulin domain 4 of C3, which contains a binding site for the complement inhibitor compstatin and is considered critical for the interaction of C3 with the AP C3 convertase. Structural analyses suggested that the mutation disturbs the integrity of macroglobulin domain 4 and induces conformational changes that propagate into adjacent regions. Indeed, C3 M373T showed an altered binding pattern for compstatin and surface-bound C3b, and the presence of Thr373 in either the C3 substrate or convertase-affiliated C3b impaired C3 activation and opsonization. In contrast to known gain-of-function mutations in C3, patients affected by this loss-of-function mutation did not develop familial disease, but rather showed diverse and mostly episodic symptoms. Our study therefore reveals the molecular mechanism of a relevant loss-of-function mutation in C3 and provides insight into the function of the C3 convertase, the differential involvement of C3 activity in clinical conditions, and some potential implications of therapeutic complement inhibition.