Caspase activation has been extensively studied in the context of apoptosis. However, caspases also control other cellular functions, although the mechanisms regulating caspases in nonapoptotic contexts remain obscure. Drosophila IAP1 (DIAP1) is an endogenous caspase inhibitor that is crucial for regulating cell death during development. Here we describe Drosophila IKK-related kinase (DmIKKvarepsilon) as a regulator of caspase activation in a nonapoptotic context. We show that DmIKKvarepsilon promotes degradation of DIAP1 through direct phosphorylation. Knockdown of DmIKKvarepsilon in the proneural clusters of the wing imaginal disc, in which nonapoptotic caspase activity is required for proper sensory organ precursor (SOP) development, stabilizes endogenous DIAP1 and affects Drosophila SOP development. Our results demonstrate that DmIKKvarepsilon is a determinant of DIAP1 protein levels and that it establishes the threshold of activity required for the execution of nonapoptotic caspase functions.