Proteolytic processing at the end of the G(1) phase generates a CUX1 isoform, p110, which functions either as a transcriptional activator or repressor and can accelerate entry into S phase. Here we describe a second proteolytic event that generates an isoform lacking two active repression domains in the COOH terminus. This processing event was inhibited by treatment of cells with synthetic and natural caspase inhibitors. In vitro, several caspases generated a processed isoform that co-migrated with the in vivo generated product. In cells, recombinant CUX1 proteins in which the region of cleavage was deleted or in which Asp residues were mutated to Ala, were not proteolytically processed. Importantly, this processing event was not associated with apoptosis, as assessed by terminal dUTP nick end labeling assay, cytochrome c localization, poly(ADP-ribose) polymerase cleavage, and fluorescence-activated cell sorting. Moreover, processing was observed in S phase but not in early G(1), suggesting that it is regulated through the cell cycle. The functional importance of this processing event was revealed in reporter and cell cycle assays. A recombinant, processed, CUX1 protein was a more potent transcriptional activator of several cell cycle-related genes and was able to accelerate entry into S phase, whereas mutants that could not be processed were inactive in either assay. Conversely, cells treated with the quinoline-Val Asp-2,6-difluorophenoxymethylketone caspase inhibitor proliferated more slowly and exhibited delayed S phase entry following exit from quiescence. Together, our results identify a substrate of caspases in proliferating cells and suggest a mechanism by which caspases can accelerate cell cycle progression.