Lysates prepared from the amebocytes of Limulus polyphemus, the horseshoe crab, are gelled by endotoxin. Studies were carried out to characterize the components of amebocyte lysate and to examine the kinetics of their reaction with endotoxin. Analysis of amebocyte lysate using sucrose density gradients showed two peaks at 46% and 86% gradient volumes. G50 and G75 Sephadex column chromatography resulted in three protein peaks. One fraction contained a clottable protein, which had a molecular weight of approximately 27,000, and was heat stable. Another fraction contained a high molecular weight, heat labile material, which was activated by endotoxin and reacted with the clottable protein to form a gel. The rate of the reaction between endotoxin and amebocyte lysate was dependent upon the concentration of endotoxin and the concentration of the fraction containing the high molecular weight material. The activity of this fraction was inhibited by diisopropyl fluorophosphate, parachloromercuribenzoate, and para-chloromercuriphenyl sulfonate, suggesting that enzymatic activity depended upon serine hydroxyl and sulfhydryl groups. The reaction between endotoxin and the fractions of lysate was temperature and pH dependent. The data suggest that endotoxin activates an enzyme which then gels the clottable protein contained in amebocyte lysate.