We studied 78 patients with Lyme disease to determine how immune complexes and autoantibodies are related to the development of chronic Lyme arthritis. Circulating C1q binding material was found in nearly all patients at onset of erythema chronicum migrans, the skin lesion that marks the onset of infection with the causative spirochete. In patients with only subsequent arthritis this material tended to localize to joints where it gradually increased in concentrations with greater duration of joint inflammation. In joints, its concentration correlated positively with the number of synovial fluid polymorphonuclear leukocytes. Despite the prolonged presence of putative immune complexes, rheumatoid factors could not be demonstrated. These observations suggest that phlogistic immune complexes based on spirochete antigens form locally within joints during chronic Lyme arthritis.