Several human inhibitor of apoptosis (IAP) family proteins function by directly inhibiting specific caspases in a mechanism that does not require IAP cleavage. In this study, however, we demonstrate that endogenous XIAP is cleaved into two fragments during apoptosis induced by the tumor necrosis factor family member Fas (CD95). The two fragments produced comprise the baculoviral inhibitory repeat (BIR) 1 and 2 domains (BIR1-2) and the BIR3 and RING (BIR3-Ring) domains of XIAP. Overexpression of the BIR1-2 fragment inhibits Fas-induced apoptosis, albeit at significantly reduced efficiency compared with full-length XIAP. In contrast, overexpression of the BIR3-Ring fragment results in a slight enhancement of Fas-directed apoptosis. Thus, cleavage of XIAP may be one mechanism by which cell death programs circumvent the anti-apoptotic barrier posed by XIAP. Interestingly, ectopic expression of the BIR3-Ring fragment resulted in nearly complete protection from Bax-induced apoptosis. Use of purified recombinant proteins revealed that BIR3-Ring is a specific inhibitor of caspase-9 whereas BIR1-2 is specific for caspases 3 and 7. Therefore XIAP possesses two different caspase inhibitory activities which can be attributed to distinct domains within XIAP. These data may provide an explanation for why IAPs have evolved with multiple BIR domains.