M161Ag is a 43-kDa surface lipoprotein of Mycoplasma fermentans, serving as a potent cytokine inducer for monocytes/macrophages, maturing dendritic cells (DCs), and activating host complement on affected cells. It possesses a unique N-terminal lipo-amino acid, S:-diacylglyceryl cysteine. The 2-kDa macrophage-activating lipopeptide-2 (MALP-2), recently identified as a ligand for Toll-like receptor 2 (TLR2), is derived from M161Ag. In this study, we identified structural motifs sustaining the functions of M161Ag using wild-type and unlipidated rM161Ag with (SP(+)) or without signal peptides (SP(-)). Because the SP(+) rM161Ag formed dimers via 25Cys, we obtained a monomeric form by mutagenesis (SP(+)C25S). Only wild type accelerated maturation of human DCs as determined by the CD83/86 criteria, suggesting the importance of the N-terminal fatty acids for this function. Wild-type and the SP(+) form of monomer induced secretion of TNF-alpha and IL-12 p40 by human monocytes and DCs. Either lipid or signal peptide at the N-terminal portion of monomer was required for expression of this function. In contrast, murine macrophages produced TNF-alpha in response to wild type, but not to any recombinant form of M161Ag, suggesting the species-dependent response to rM161Ag. Wild-type and both monomeric and dimeric SP(+) forms possessed the ability to activate complement via the alternative pathway. Again, the hydrophobic portion was associated with this function. These results, together with the finding that macrophages from TLR2-deficient mice did not produce TNF-alpha in response to M161Ag, infer that the N-terminal hydrophobic structure of M161Ag is important for TLR2-mediated cell activation and complement activation.