During apoptosis, Smac (second mitochondria-derived activator of caspases)/DIABLO, an IAP (inhibitor of apoptosis protein)-binding protein, is released from mitochondria and potentiates apoptosis by relieving IAP inhibition of caspases. We demonstrate that exposure of MCF-7 cells to the death-inducing ligand, TRAIL (tumor necrosis factor-related apoptosis-inducing ligand), results in rapid Smac release from mitochondria, which occurs before or in parallel with loss of cytochrome c. Smac release is inhibited by Bcl-2/Bcl-xL or by a pan-caspase inhibitor demonstrating that this event is caspase-dependent and modulated by Bcl-2 family members. Following release, Smac is rapidly degraded by the proteasome, an effect suppressed by co-treatment with a proteasome inhibitor. As the RING finger domain of XIAP possesses ubiquitin-protein ligase activity and XIAP binds tightly to mature Smac, an in vitro ubiquitination assay was performed which revealed that XIAP functions as a ubiquitin-protein ligase (E3) in the ubiquitination of Smac. Both the association of XIAP with Smac and the RING finger domain of XIAP are essential for ubiquitination, suggesting that the ubiquitin-protein ligase activity of XIAP may promote the rapid degradation of mitochondrial-released Smac. Thus, in addition to its well characterized role in inhibiting caspase activity, XIAP may also protect cells from inadvertent mitochondrial damage by targeting pro-apoptotic molecules for proteasomal degradation.