The tight regulation of innate immunity on extracellular matrix (ECM) is a vital part of immune homeostasis throughout the human body and disruption to this regulation in the eye is thought to contribute directly to the progression of age-related macular degeneration (AMD). The plasma complement regulator factor H (FH) is believed to be the main regulator that protects ECM against damaging complement activation. However, here we demonstrate that a truncated form of FH, called factor-H like protein 1 (FHL-1), is the main regulatory protein in the layer of ECM under human retina, called Bruch’s membrane. Bruch’s membrane is a major site of AMD disease pathogenesis and where drusen, the hallmark lesions of AMD, form. We show that FHL-1 can passively diffuse through Bruch’s membrane, whereas the full sized, glycosylated, FH cannot. FHL-1 is largely bound to Bruch’s membrane through interactions with heparan sulfate and we show that the common Y402H polymorphism in the CFH gene, associated with an increased risk of AMD, reduces the binding of FHL-1 to this heparan sulfate. We also show that FHL-1 is retained in drusen while FH coats the periphery of the lesions, perhaps inhibiting their clearance. Our results identify a novel mechanism of complement regulation in the human eye, which highlights potential new avenues for therapeutic strategies.