In addition to their well-known function in apoptosis, caspases are also important in several nonapoptotic processes. How caspase activity is restrained and shut down under such nonapoptotic conditions remains unknown. Here, we show that Drosophila melanogaster inhibitor of apoptosis protein 2 (DIAP2) controls the level of caspase activity in living cells. Animals that lack DIAP2 have higher levels of drICE activity. Although diap2-deficient cells remain viable, they are sensitized to apoptosis following treatment with sublethal doses of x-ray irradiation. We find that DIAP2 regulates the effector caspase drICE through a mechanism that resembles the one of the caspase inhibitor p35. As for p35, cleavage of DIAP2 is required for caspase inhibition. Our data suggest that DIAP2 forms a covalent adduct with the catalytic machinery of drICE. In addition, DIAP2 also requires a functional RING finger domain to block cell death and target drICE for ubiquitylation. Because DIAP2 efficiently interacts with drICE, our data suggest that DIAP2 controls drICE in its apoptotic and nonapoptotic roles.