Nedd2 (caspase-2) is a cysteine protease of the caspase family that has been demonstrated to play a role in the apoptotic pathway. The 51-kDa precursor of Nedd2 undergoes cleavage into two subunits following various apoptotic stimuli. In this study, we have investigated the dimerization of the Nedd2 precursor (pro-Nedd2) in Saccharomyces cerevisiae and its self-processing activity in vivo. We demonstrate that the expression of pro-Nedd2 in yeast cells results in processing of the precursor. A catalytically inactive pro-Nedd2 mutant dimerized in yeast, and the dimerization required both the prodomain and the carboxyl-terminal residues. Aspartate mutants that block the removal of the p14/p12 subunits, but not the wild-type Nedd2, were shown to dimerize in yeast cells, suggesting that dimerization occurs prior to processing. In vitro processing of pro-Nedd2 by recombinant active Nedd2 defined the aspartate residues that are crucial for processing to occur. Both the in vivo and in vitro processing of pro-Nedd2 directly correlated with its ability to induce cell death in transient overexpression experiments.