The inhibitor of apoptosis (IAP) family of anti-apoptotic proteins regulate programmed cell death and/or apoptosis. One such protein, X-linked IAP (XIAP), inhibits the activity of the cell death proteases, caspase-3, -7, and -9. In this study, using constitutively active mutants of caspase-3, we found that XIAP promotes the degradation of active-form caspase-3, but not procaspase-3, in living cells. The XIAP mutants, which cannot interact with caspase-3, had little or no activity of promoting the degradation of caspase-3. RING finger mutants of XIAP also could not promote the degradation of caspase-3. A proteasome inhibitor suppressed the degradation of caspase-3 by XIAP, suggesting the involvement of a ubiquitin-proteasome pathway in the degradation. An in vitro ubiquitination assay revealed that XIAP acts as a ubiquitin-protein ligase for caspase-3. Caspase-3 was ubiquitinated in the presence of XIAP in living cells. Both the association of XIAP with caspase-3 and the RING finger domain of XIAP were essential for ubiquitination. Finally, the RING finger mutants of XIAP were less effective than wild-type XIAP at preventing apoptosis induced by overexpression of either active-form caspase-3 or Fas. These results demonstrate that the ubiquitin-protein ligase activity of XIAP promotes the degradation of caspase-3, which enhances its anti-apoptotic effect.