The inhibitor of apoptosis proteins (IAPs) constitute an evolutionarily conserved family of homologous proteins that suppress apoptosis induced by multiple stimuli. Some IAP family proteins, including XIAP, cIAP-1, and cIAP-2, can bind and directly inhibit selected caspases, a group of intracellular cell death proteases. These caspase-inhibiting IAP family proteins all contain three tandem BIR domains followed by a RING zinc finger domain. To determine the structural basis for caspase inhibition by XIAP, we analyzed the effects of various fragments of this IAP family protein on caspase activity in vitro and on apoptosis suppression in intact cells. The RING domain of XIAP failed to inhibit the activity of recombinant caspases-3 or -7, whereas a fragment of XIAP encompassing the three tandem BIR domains potently inhibited these caspases in vitro and blocked Fas (CD95)-induced apoptosis when expressed in cells. Further dissection of the XIAP protein demonstrated that only the second of the three BIR domains (BIR2) was capable of binding and inhibiting these caspases. The apparent inhibition constants (Ki) for BIR2-mediated inhibition of caspases-3 and -7 were 2-5 nM, indicating that this single BIR domain possesses potent anti-caspase activity. Expression of the BIR2 domain in cells also partially suppressed Fas-induced apoptosis and blocked cytochrome c-induced processing of caspase-9 in cytosolic extracts, whereas BIR1 and BIR3 did not. These findings identify BIR2 as the minimal caspase-inhibitory domain of XIAP and indicate that a single BIR domain can be sufficient for binding and inhibiting caspases.