Complement dysregulation is a key component in the pathogenesis of age-related macular degeneration (AMD) and related diseases such as early-onset macular drusen (EOMD). Although genetic variants of complement factor H (CFH) are associated with AMD risk, the impact of CFH and factor H-like protein 1 (FHL-1) expression on local complement activity in human retinal pigment epithelium (RPE) remains unclear. We identified a novel CFH variant in a family with EOMD and generated patient induced pluripotent stem cell (iPSC)-derived RPE cells. We assessed CFH and FHL-1 co-factor activity through C3b breakdown assays and measured complement activation by immunostaining for membrane attack complex (MAC) formation. Expression of CFH, FHL-1, local alternative pathway (AP) components, and regulators of complement activation (RCA) in EOMD RPE cells was determined by quantitative PCR, western blot, and immunostaining. Isogenic EOMD (cEOMD) RPE was generated using CRISPR/Cas9 gene editing. The CFH variant (c.351-2A>G) resulted in loss of CFH and FHL-1 expression and significantly reduced CFH and FHL-1 protein expression (∼50%) in EOMD iPSC RPE cells. These cells exhibited increased MAC deposition upon exposure to normal human serum. Under inflammatory or oxidative stress conditions, CFH and FHL-1 expression in EOMD RPE cells paralleled that of controls, whereas RCA expression, including MAC formation inhibitors, was elevated. CRISPR/Cas9 correction restored CFH/FHL-1 expression and mitigated alternative pathway complement activity in cEOMD RPE cells. Identification of a novel CFH variant in patients with EOMD resulting in reduced CFH and FHL-1 and increased local complement activity in EOMD iPSC RPE supports the involvement of CFH haploinsufficiency in EOMD pathogenesis.