Inhibitor of apoptosis proteins (IAPs) act as endogenous inhibitors of active caspases. Drosophila IAP1 (DIAP1) activity is required to keep cells from undergoing apoptosis. The central cell death regulators Reaper and Hid induce apoptosis very rapidly by inhibiting DIAP1 function. We have developed a system for replacing endogenous DIAP1 with mutant forms of the protein, allowing us to examine the roles of various domains of the protein in living and dying cells. We found that DIAP1 is cleaved by a caspase early after the initiation of apoptosis. This cleavage is required for DIAP1 degradation, but Rpr and Hid can still initiate apoptosis in the absence of cleavage. The cleavage of DIAP1 promotes DIAP1 degradation in a manner dependent on the function of the ubiquitin ligase function of the DIAP1 ring domain. This ring domain function is required for Hid-induced apoptosis. We propose a model that synthesizes our data with those of other laboratories and provide a consistent model for DIAP1 function in living and dying cells.