The inactivation of bacterial endotoxin by aqueous extracts ( Limulus amoebocyte lysate) of the circulating blood cells (amoebocytes) of the horseshoe crab, Limulus polyphemus, is described. Active extracts were obtained by heating Limulus amoebocyte lystate (LAL) to 60°C for 20 min to denature the clotting enzyme, rendering the LAL incapable of gel formation in the presence of endotoxin. Endotoxin inactivation was assayed using the Limulus amoebocyte lysate test and by rabbit bioassay. Inactivation of endotoxin with heated extracts of LAL was suggestive of enzymatic mediation, as indicated by dependence on time, temperature, pH, and the kinetics of inactivation. Endotoxin inactivation occurred over a broad pH range, 4.5–8.5, with the optimum at a pH of 6.1. Temperature optima were between 37° and 50°C, with observed activity between 0° and 65°C. Ionized calcium was inhibitory to endotoxin inactivation with heated extracts of LAL, with partial inhibition at 0.001 m calcium and complete inhibition at 0.02 m calcium. Other divalent cations (Mg, Ba, Mn, and Cu) were also found to inhibit the inactivation of endotoxin. Similarities between the endotoxin-inactivating system of L. polyphemus and those described to be present in mammalian and lower vertebrate sera are discussed.