Genetic variants within complement factor H (CFH), a major alternative complement pathway regulator, are associated with the development of age-related macular degeneration (AMD) and other complementopathies. This is explained with the reduced binding of CFH or its splice variant factor H-like protein 1 (FHL-1) to self-ligands or altered self-ligands (e.g., malondialdehyde [MDA]-modified molecules) involved in homeostasis, thereby causing impaired complement regulation. Considering the critical role of CFH in inhibiting alternative pathway activation on MDA-modified surfaces, we performed an unbiased genome-wide search for genetic variants that modify the ability of plasma CFH to bind MDA in 1,830 individuals and characterized the mechanistic basis and the functional consequences of this. In a cohort of healthy individuals, we identified rs1061170 in CFH and the deletion of CFHR3 and CFHR1 as dominant genetic variants that modify CFH/FHL-1 binding to MDA. We further demonstrated that FHR1 and FHR3 compete with CFH for binding to MDA-epitopes and that FHR1 displays the highest affinity toward MDA-epitopes compared to CFH and FHR3. Moreover, FHR1 bound to MDA-rich areas on necrotic cells and prevented CFH from mediating its cofactor activity on MDA-modified surfaces, resulting in enhanced complement activation. These findings provide a mechanistic explanation as to why the deletion of CFHR3 and CFHR1 is protective in AMD and highlight the importance of genetic variants within the CFH/CFHR3/CFHR1 locus in the recognition of altered-self in tissue homeostasis.