Factor H (FH) binds apoptotic cells to limit the inflammatory potential of complement. Here we report that FH is actively internalized by apoptotic cells to enhance cathepsin L-mediated cleavage of endogenously expressed C3, which results in increased surface opsonization with iC3b. In addition, internalized FH forms complexes with nucleosomes, facilitates their phagocytosis by monocytes and induces an anti-inflammatory biased cytokine profile. A similar cytokine response was noted for apoptotic cells coated with FH, confirming that FH diminishes the immunogenic and inflammatory potential of autoantigens. These findings were supported by in vivo observations from CFH−/− MRL-lpr mice, which exhibited higher levels of circulating nucleosomes and necrotic cells than their CFH+/+ littermates. This unconventional function of FH broadens the established view of apoptotic cell clearance and appears particularly important considering the strong associations with genetic FH alterations and diseases such as systemic lupus erythematosus and age-related macular degeneration.