Almost all humans with homozygous deficiency of C1q develop systemic lupus erythematosus (SLE). The precise cellular mechanism(s) by which C1q prevents the development of SLE remains unclear. In this study, we tested the role of C1q in the regulation of IFN-α induced by immune complexes (ICs) in vitro, as well as the consequences of lack of C1q in vivo. Our experiments revealed that C1q preferentially promotes the binding of SLE ICs to monocytes rather than plasmacytoid dendritic cells, but this inhibition was not due to the induction of inhibitory soluble factors. The presence of C1q also altered the trafficking of ICs within monocytes such that ICs persisted in early endosomes. In patients with C1q deficiency, serum and cerebrospinal fluid levels of IFN-α and IFN-γ-inducible protein-10 levels were elevated and strongly correlated with Ro autoantibodies, demonstrating the clinical significance of these observations. These studies therefore associate C1q deficiency with defective regulation of IFN-α and provide a better understanding of the cellular mechanisms by which C1q prevents the development of IC-stimulated autoimmunity.