FAS (also called APO-1 and CD95) and its physiological ligand, FASL, regulate apoptosis of unwanted or dangerous cells, functioning as a guardian against autoimmunity and cancer development. Distinct cell types differ in the mechanisms by which the 'death receptor' FAS triggers their apoptosis. In type I cells, such as lymphocytes, activation of 'effector caspases' by FAS-induced activation of caspase-8 suffices for cell killing, whereas in type II cells, including hepatocytes and pancreatic beta-cells, caspase cascade amplification through caspase-8-mediated activation of the pro-apoptotic BCL-2 family member BID (BH3 interacting domain death agonist) is essential. Here we show that loss of XIAP (X-chromosome linked inhibitor of apoptosis protein) function by gene targeting or treatment with a second mitochondria-derived activator of caspases (SMAC, also called DIABLO; direct IAP-binding protein with low pI) mimetic drug in mice rendered hepatocytes and beta-cells independent of BID for FAS-induced apoptosis. These results show that XIAP is the critical discriminator between type I and type II apoptosis signalling and suggest that IAP inhibitors should be used with caution in cancer patients with underlying liver conditions.