The interaction of fresh rat and guinea pig serum with washed preformed immune aggregates has been studied with respect to the loss in hemolytic potency of the serum, diminution of the C'3; activity, and appearance of anaphylatoxin. It has been found that the formation of anaphylatoxin, as judged by its effect on capillary permeability and smooth muscle contraction, is coincident with or subsequent to the fixation of all the known C' components. Less anaphylatoxin is formed by aggregates formed with excess antigen than those in equivalence ratio combination. C' fixation, as well as anaphylatoxin production, may be inhibited by chelation of the divalent cations, presumably by interfering with the fixation of C'1, C'4, and C'2. Phlorizin suppresses the utilization of C'3 in immune hemolysis, C' fixation by antigen-antibody aggregates, and the production of anaphylatoxin. The biological activities associated with the fixation of C' are not manifest unless C'3 participates in this process at 37°C. It is concluded that the formation of anaphylatoxin may be regarded as a product of C' fixation.