Complement is viewed as a critical serum-operative component of innate immunity, with processing of its key component, C3, into activation fragments C3a and C3b confined to the extracellular space. We report here that C3 activation also occurred intracellularly. We found that the T cell-expressed protease cathepsin L (CTSL) processed C3 into biologically active C3a and C3b. Resting T cells contained stores of endosomal and lysosomal C3 and CTSL and substantial amounts of CTSL-generated C3a. While “tonic” intracellular C3a generation was required for homeostatic T cell survival, shuttling of this intracellular C3-activation-system to the cell surface upon T cell stimulation induced autocrine proinflammatory cytokine production. Furthermore, T cells from patients with autoimmune arthritis demonstrated hyperactive intracellular complement activation and interferon-γ production and CTSL inhibition corrected this deregulated phenotype. Importantly, intracellular C3a was observed in all examined cell populations, suggesting that intracellular complement activation might be of broad physiological significance. Display omitted •Complement C3 is activated intracellularly in human T cells by cathepsin L•Intracellular C3 activation mediates cell survival and Th1 induction•Increased intracellular C3 activation underlies T effector dysregulation in arthritis•Patients with serum C3-deficiency retain intracellular C3a generation