Factor B and C2, components of the complement system, are novel types of serine proteinase that are encoded by genes in the major histocompatibility complex. cDNA probes specific for these two proteins have been used to isolate cosmid clones of genomic DNA which contain the Factor B and C2 genes. Southern blot analysis of the cosmid clones and of uncloned genomic DNA has shown that there are single Factor B and C2 loci that are less than 1 kilobase apart. The Factor B gene has been further characterized by DNA sequence analysis. It is approximately 6 kilobases in length, and is split into 18 exons. The amino acid sequence of the Ba fragment contains three homologous regions which are encoded by separate exons, suggesting that they arose by DNA duplication events. In the serine proteinase domain each of the functionally important parts of the active site are encoded on separate exons. Comparison of this region of the gene with the exon organization of other serine proteinases shows a close correlation between them, but also reveals the presence of an exon in Factor B with no homologous counterpart in the other serine proteinases. The possible functional significance of the peptide encoded by this exon and the evolution of this novel serine proteinase are discussed.