The inflammatory response to spinal cord injury (SCI) involves localization and activation of innate and adaptive immune cells and proteins, including the complement cascade. Complement C3 is important for the classical, alternative, and lectin pathways of complement activation, and its cleavage products C3a and C3b mediate several functions in the context of inflammation, but little is known about the potential functions of C3 on regeneration and survival of injured neurons after SCI. We report that 6 weeks after dorsal hemisection with peripheral conditioning lesion, C3(-/-) mice demonstrated a 2-fold increase in sensory axon regeneration in the spinal cord in comparison to wildtype C3(+/+) mice. In vitro, addition of C3 tripled both myelin-mediated neurite outgrowth inhibition and neuron loss versus myelin alone, and ELISA experiments revealed that myelin serine proteases cleave C3 to generate active fragments. Addition of purified C3 cleavage products to cultured neurons suggested that C3b is responsible for the growth inhibitory and neurotoxic or anti-adhesion activities of C3. These data indicate that C3 reduces neurite outgrowth and neuronal viability in vitro and restricts axon regeneration in vivo, and demonstrate a novel, non-traditional role for this inflammatory protein in the central nervous system.