The mediator of haemolysis in the plasma of the horseshoe crab, Limulus polyphemus, is limulin, a sialic acid-binding lectin. The haemolytic activity of limulin is inhibited by thiol ester-reacted forms of Limulus alpha(2)-macroglobulin, the third-most abundant protein of the plasma. Limulus alpha(2)-macroglobulin that has experienced cleavage of its internal thiol ester bond, consequent to reaction with proteases, or with the small primary amine, methylamine, reduces the haemolytic activity of limulin when present at molar excesses that approximate the relative concentrations of these two proteins in the plasma. Native, unreacted Limulus alpha(2)-macroglobulin has no effect on the haemolytic activity of limulin. Limulin binds thiol ester-reacted forms of Limulus alpha(2)-macroglobulin both in a solid-phase assay and in solution with an avidity 10-25 times higher than native, unreacted Limulus alpha(2)-macroglobulin. Protease-reacted alpha(2)-macroglobulin functions as a marker for the presence of foreign proteases in the blood of Limulus, and thus of pathogenic organisms that release proteases as facilitators of invasion and pathogenicity. Modulation of the haemolytic system represents a novel function for alpha(2)-macroglobulin.