PURPOSE. Complement system dysregulation is strongly linked to the progression of age-related macular degeneration (AMD). Deposition of complement including C3 within the lesions in atrophic AMD is thought to contribute to lesion growth, although the contribution of local cellular sources remains unclear. We investigated the role of retinal microglia and macrophages in complement activation within atrophic lesions, in AMD and in models of focal retinal degeneration. METHODS. Human AMD donor retinas were labeled for C3 expression via in situ hybridization. Rats were subject to photo-oxidative damage, and lesion expansion was tracked over a 2-month period using optical coherence tomography (OCT). Three strategies were used to determine the contribution of local and systemic C3 in mice: total C3 genetic ablation, local C3 inhibition using intravitreally injected small interfering RNA (siRNA), and depletion of serum C3 using cobra venom factor. RESULTS. Retinal C3 was expressed by microglia/macrophages located in the outer retina in AMD eyes. In rodent photo-oxidative damage, C3-expressing microglia/macrophages and complement activation were located in regions of lesion expansion in the outer retina over 2 months. Total genetic ablation of C3 ameliorated degeneration and complement activation in retinas following damage, although systemic depletion of serum complement had no effect. In contrast, local suppression of C3 expression using siRNA inhibited complement activation and deposition, and reduced cell death. CONCLUSIONS. These findings implicate C3, produced locally by retinal microglia/macrophages, as contributing causally to retinal degeneration. Consequently, this suggests that C3-targeted gene therapy may prove valuable in slowing the progression of AMD.