Death receptors, such as Fas and tumor necrosis factor-related apoptosis-inducing ligand receptors, recruit Fas-associated death domain and pro-caspase-8 homodimers, which are then autoproteolytically activated. Active caspase-8 is released into the cytoplasm, where it cleaves various proteins including pro-caspase-3, resulting in apoptosis. The cellular Fas-associated death domain-like interleukin-1-beta-converting enzyme-inhibitory protein long form (FLIP(L)), a structural homologue of caspase-8 lacking caspase activity because of several mutations in the active site, is a potent inhibitor of death receptor-induced apoptosis. FLIP(L) is proposed to block caspase-8 activity by forming a proteolytically inactive heterodimer with caspase-8. In contrast, we propose that FLIP(L)-bound caspase-8 is an active protease. Upon heterocomplex formation, a limited caspase-8 autoprocessing occurs resulting in the generation of the p43/41 and the p12 subunits. This partially processed form but also the non-cleaved FLIP(L)-caspase-8 heterocomplex are proteolytically active because they both bind synthetic substrates efficiently. Moreover, FLIP(L) expression favors receptor-interacting kinase (RIP) processing within the Fas-signaling complex. We propose that FLIP(L) inhibits caspase-8 release-dependent pro-apoptotic signals, whereas the single, membrane-restricted active site of the FLIP(L)-caspase-8 heterocomplex is proteolytically active and acts on local substrates such as RIP.