We report further characterization of the physical and immunologic properties, mechanism of action, and intracellular localization of Acanthamoeba castellanii capping protein, an actin regulatory protein discovered by Isenberg (Isenberg, G., U. Aebi, and T. D. Pollard, 1980, Nature (Lond.) 288:455-459). The native molecular weight calculated from measurements of Stokes' radius (3.8 nm by gel filtration chromatography) and sedimentation coefficient (4.8 S by sucrose gradient velocity sedimentation) was 74,000 daltons. The subunit molecular weights were 31,000 and 28,000 daltons, so the native molecule is a heterodimer. The two subunits did not immunologically cross-react with each other or with any other proteins from Acanthamoeba or several other organisms. In studies of the mechanism of action, Isenberg (see above reference) found that capping protein blocked polymerization from the barbed end of actin filaments and sedimented with actin filaments. We confirmed that capping protein binds to actin filaments with a gel filtration assay. Capping protein decreased the length distribution and high shear viscosity of actin filaments. Capping protein did not bundle or cross-link actin filaments. Low concentrations of capping protein increased the critical concentration for muscle and ameba actin polymerization from 0.1 to 0.6 microM in Mg++ and EGTA. Increasing amounts of capping protein did not increase the critical concentration further. In Ca++ capping protein did not change the critical concentration for muscle actin, but did increase the critical concentration for ameba actin. Ca++ had no effect on the ability of capping protein to decrease the low or high shear viscosity of actin filaments. By indirect fluorescent antibody staining, capping protein was localized to the cell cortex, an area rich in actin filaments. During subcellular fractionation of homogenates, about 1/3 of cellular capping protein banded with a crude membrane fraction. The other 2/3 of cellular capping protein was soluble, with a Stokes' radius equal to that of the purified protein. The molar ratio of capping protein to actin in the cell was 1:150.