Human complement factor B is the crucial catalytic component of the C3 convertase enzyme that activates the alternative pathway of complement-mediated immunity. Although a serine protease in its own right, factor B circulates in human serum as an inactive zymogen and there is a crystal structure only for the inactive state of factor B and various fragments. To provide greater insight to the catalytic function and properties of factor B, we have used short para-nitroanilide derivatives of 4- to 15-residue peptides as substrates to profile the catalytic properties of factor B. Among factors found to influence catalytic activity of factor B was an unusual dependence on pH. Non-physiological alkaline conditions strongly promoted substrate cleavage by factor B, consistent with a pH-accessible conformation of the enzyme that may be critical for catalytic function. Small N-terminal extensions to conventional hexapeptide para-nitroanilide substrates significantly increased catalytic activity of factor B, which was more selective for its cleavage site than trypsin. The new chromogenic assay enabled optimization of catalysis conditions, the profiling of different substrate sequences, and the development of the first reversible and competitive substrate-based inhibitor of factor B. The inhibitor was also shown to prevent in vitro formation of C3a from C3 by factor B, by synthetic and by natural C3 convertase of the alternative complement activation pathway, and to block formation of membrane attack complex. The availability of a reversible substrate-based inhibitor that could stabilize the active conformation of factor B, in conjunction with a pH-promoted higher processing activity, may offer a new avenue to obtain crystal structures of factor B and C3 convertase in an active conformation.