The aspartate-specific caspases are critical protease effectors of programmed cell death and consequently represent important targets for apoptotic intervention. Baculovirus P35 is a potent substrate inhibitor of metazoan caspases, a property that accounts for its unique effectiveness in preventing apoptosis in phylogenetically diverse organisms. Here we report the 2.2 A resolution crystal structure of P35, the first structure of a protein inhibitor of the death caspases. The P35 monomer possesses a solvent-exposed loop that projects from the protein's main beta-sheet core and positions the requisite aspartate cleavage site at the loop's apex. Distortion or destabilization of this reactive site loop by site-directed mutagenesis converted P35 to an efficient substrate which, unlike wild-type P35, failed to interact stably with the target caspase or block protease activity. Thus, cleavage alone is insufficient for caspase inhibition. These data are consistent with a new model wherein the P35 reactive site loop participates in a unique multi-step mechanism in which the spatial orientation of the loop with respect to the P35 core determines post-cleavage association and stoichiometric inhibition of target caspases.