The inhibitor of apoptosis proteins (IAPs) plays a central role in repressing caspase-mediated cell death. However, little is known about the actual role of endogenously expressed IAPs in cancer cells. We found that the cytochrome c/apoptotic protease-activating factor-1 (apoptosome)-dependent caspase activation is deficient in human non-small cell lung cancer (NSCLC) NCI-H460 cells. This dysfunctional apoptosome activity was not correlated with any decrease of apoptosome component factors, but it was linked to an increased X-linked inhibitor of apoptosis protein (XIAP). In H460 cells, the overexpressed XIAP, but not c-IAP1, bound to the processed form of caspase-9 and suppressed the activation of downstream effector caspases. Moreover, the defect in apoptosome activity in H460 cells was dramatically restored by the IAP-targeting SmacN7 peptide, which disrupted XIAP-caspase-9 binding, indicating an essential role of the IAP in the apoptosome inhibition. However, the SmacN7 did not show any striking effect on the apoptosome activity of normal lung fibroblast cells, although these cells also expressed modest amounts of IAP. To explore the therapeutic approach, we additionally developed SmacN7(R)8, a newly designed cell permeable peptide. The SmacN7(R)8 selectively reversed the apoptosis resistance of H460 cells, and when in combination with chemotherapy, regressed the tumor growth in vivo with little toxicity to the mice. Our results indicate that IAP-dependent suppression of apoptosome predominantly occurs in IAP-overexpressing tumor, and the IAP-targeting Smac peptide is an effective molecule to increase tumor cell death induced by chemotherapy in vitro and in vivo.