Up to half of the heritability of age-related macular degeneration (AMD) is explained by common variants. Here, we report the identification of a rare, highly penetrant missense mutation in CFI encoding a p.Gly119Arg substitution that confers high risk of AMD (P = 3.79 × 106; odds ratio (OR) = 22.20, 95% confidence interval (CI) = 2.98–164.49). Plasma and sera from cases carrying the p.Gly119Arg substitution mediated the degradation of C3b, both in the fluid phase and on the cell surface, to a lesser extent than those from controls. Recombinant protein studies showed that the Gly119Arg mutant protein is both expressed and secreted at lower levels than wild-type protein. Consistent with these findings, human CFI mRNA encoding Arg119 had reduced activity compared to wild-type mRNA encoding Gly119 in regulating vessel thickness and branching in the zebrafish retina. Taken together, these findings demonstrate that rare, highly penetrant mutations contribute to the genetic burden of AMD.