Caspases plays a key role in the execution phase of apoptosis. "Initiator" caspases, such as caspase-8, activate "effector" caspases, such as caspase-3 and -7, which subsequently cleave cellular substrates thereby precipitating the dramatic morphological changes of apoptosis. Following treatment of mice with an agonistic anti-Fas antibody to induce massive hepatocyte apoptosis, we now demonstrate a distinct subcellular localization of the effector caspases-3 and -7. Active caspase-3 is confined primarily to the cytosol, whereas active caspase-7 is associated almost exclusively with the mitochondrial and microsomal fractions. These data suggest that caspases-3 and -7 exert their primary functions in different cellular compartments and offer a possible explanation of the presence of caspase homologs with overlapping substrate specificities. Translocation and activation of caspase-7 to the endoplasmic reticulum correlates with the proteolytic cleavage of the endoplasmic reticular-specific substrate, sterol regulatory element-binding protein 1. Liver damage, induction of apoptosis, activation and translocation of caspase-7, and proteolysis of sterol regulatory element-binding protein 1 are all blocked by the caspase inhibitor, benzyloxycarbonyl-Val-Ala-Asp fluoromethyl ketone (Z-VAD. fmk). Our data demonstrate for the first time the differential subcellular compartmentalization of specific effector caspases following the induction of apoptosis in vivo.