Baculovirus P35 is a universal substrate-inhibitor of the death caspases. Stoichiometric inhibition by P35 is correlated with cleavage of its reactive site loop (RSL) and formation of a stable P35.caspase complex through a novel but undefined mechanism. The P35 crystal structure predicts that the RSL associates with the beta-sheet core of P35 positioning the caspase cleavage site at the loop's apex. Here we demonstrate that proper interaction between the RSL and the beta-sheet core is critical for caspase inhibition, but not cleavage. Disruption of RSL interaction with the beta-sheet by substituting hydrophobic residues of the RSL's transverse helix alpha1 with destabilizing charged residues caused loss of caspase inhibition, without affecting P35 cleavage. Restabilization of the helix/sheet interaction by charge compensation from within the beta-sheet partially restored anti-caspase potency. Mutational effects on P35 helix/sheet interactions were confirmed by measuring intermolecular helix/sheet association with the yeast two-hybrid system. Moreover, the identification of P35 oligomers in baculovirus-infected cells suggested that similar P35 interactions occur in vivo. These findings indicate that P35's anti-caspase potency depends on a distinct conformation of the RSL which is required for events that promote stable, post-cleavage interactions and inhibition of the target caspase.