We have designed and synthesized a cyclic, bivalent Smac mimetic (compound 3) and characterized its interaction with the X-linked inhibitor of apoptosis protein (XIAP). Compound 3 binds to XIAP containing both BIR2 and BIR3 domains with a biphasic dose-response curve representing two binding sites with IC 50 values of 0.5 and 406 nM, respectively. Compound 3 binds to XIAPs containing the BIR3-only and BIR2-only domain with K i values of 4 nM and 4.4 microM, respectively. Gel filtration experiments using wild-type and mutated XIAPs showed that 3 forms a 1:2 stoichiometric complex with XIAP containing the BIR3-only domain. However, it forms a 1:1 stoichiometric complex with XIAP containing both BIR2 and BIR3 domains, and both BIR domains are involved in the binding. Compound 3 efficiently antagonizes inhibition of XIAP in a cell-free functional assay and is >200 times more potent than its corresponding monovalent compound 2. Determination of the crystal structure of 3 in complex with the XIAP BIR3 domain confirms that 3 induces homodimerization of the XIAP BIR3 domain and provides a structural basis for the cooperative binding of one molecule of compound 3 to two XIAP BIR3 molecules. On the basis of this crystal structure, a binding model of XIAP containing both BIR2 and BIR3 domains and 3 was constructed, which sheds light on the ability of 3 to relieve the inhibition of XIAP with not only caspase-9 but also caspase-3/-7. Compound 3 is cell-permeable, effectively activates caspases in whole cells, and potently inhibits cancer cell growth. Compound 3 is a useful biochemical and pharmacological tool for further elucidating the role of XIAP in regulation of apoptosis and represents a promising lead compound for the design of potent, cell-permeable Smac mimetics for cancer treatment.