Small cell lung cancer (SCLC) is characterized by an aggressive phenotype and acquired resistance to a broad spectrum of anticancer agents. TNF-related apoptosis-inducing ligand (TRAIL) has been considered as a promising candidate for safe and selective induction of tumor cell apoptosis without toxicity to normal tissues. Here we report that TRAIL failed to induce apoptosis in SCLC cells and instead resulted in an up to 40% increase in proliferation. TRAIL-induced SCLC cell proliferation was mediated by extracellular signal-regulated kinase 1 and 2, and dependent on the expression of surface TRAIL-receptor 2 (TRAIL-R2) and lack of caspase-8, which is frequent in SCLC. Treatment of SCLC cells with interferon-gamma (IFN-gamma) restored caspase-8 expression and facilitated TRAIL-induced apoptosis. The overall loss of cell proliferation/viability upon treatment with the IFN-gamma-TRAIL combination was 70% compared to TRAIL-only treated cells and more than 30% compared to untreated cells. Similar results were obtained by transfection of cells with a caspase-8 gene construct. Altogether, our data suggest that TRAIL-R2 expression in the absence of caspase-8 is a negative determinant for the outcome of TRAIL-based cancer therapy, and provides the rationale for using IFN-gamma or other strategies able to restore caspase-8 expression to convert TRAIL from a pro-survival into a death ligand.