Members of the inhibitor of apoptosis (iap) gene family prevent programmed cell death induced by multiple signals in diverse organisms, suggesting that they act at a conserved step in the apoptotic pathway. To investigate the molecular mechanism of iap function, we expressed epitope-tagged Op-iap, the prototype viral iap from Orgyia pseudotsugata nuclear polyhedrosis virus, by using novel baculovirus recombinants and stably transfected insect cell lines. Epitope-tagged Op-iap blocked both virus- and UV radiation-induced apoptosis. With or without apoptotic stimuli, Op-IAP protein (31 kDa) cofractionated with cellular membranes and the cytosol, suggesting a cytoplasmic site of action. To identify the step(s) at which Op-iap blocks apoptosis, we monitored the effect of Op-iap expression on in vivo activation of the insect CED-3/ICE death proteases (caspases). Op-iap prevented in vivo caspase-mediated cleavage of the baculovirus substrate inhibitor P35 and blocked caspase activity upon viral infection or UV irradiation. However, unlike the stoichiometric inhibitor P35, Op-IAP failed to affect activated caspase as determined by in vitro protease assays. These findings provide the first biochemical evidence that Op-iap blocks activation of the host caspase or inhibits its activity by a mechanism distinct from P35. Moreover, as suggested by the capacity of Op-iap to block apoptosis induced by diverse signals, including virus infection and UV radiation, iap functions at a central point at or upstream from steps involving the death proteases.