Previous studies have shown that freshly isolated CD16+ NK cells are deficient in the expression of decay-accelerating factor (DAF), or CD55, a membrane regulator of C3 activation. In this study we investigated the significance, for NK cell-mediated lysis, of DAF expression on the target and effector cells. The effect of DAF expression on the susceptibility of NK cell targets was investigated by several means: first, DAF- cell lines were cloned from K562; second, the cloned DAF- cells were reconstituted with exogenous purified DAF; and third, anti-DAF F(ab')2 was used to block DAF function on the DAF+ K562 cells. Consistently, the presence of DAF in the target cell membrane, either naturally occurring or experimentally incorporated, afforded the target cell protection against lysis, and this protection could be blocked with anti-DAF. Similarly, targets for antibody-dependent cell-mediated cytotoxicity with exogenous DAF incorporated in their plasma membrane became less sensitive to antibody-dependent cell-mediated cytotoxicity by NK cells compared with the same target cells without incorporated DAF in their membranes. DAF incorporated in the plasma membranes of the effector NK cells made the NK cells less effective at killing K562 targets. The known function of DAF is to regulate C3 activation, and we were able to demonstrate that the isolated NK cell is capable of releasing C3. It is also possible that the participation of DAF in NK cell function represents a new, noncomplement-dependent function for DAF.