Caspases are intracellular cysteine-class proteases with aspartate specificity that is critical for driving processes as diverse as the innate immune response and apoptosis, exemplified by caspase-1 and caspase-3, respectively. Interestingly, caspase-1 cleaves far fewer cellular substrates than caspase-3 and also shows strong positive cooperativity between the two active sites of the homodimer, unlike caspase-3. Biophysical and kinetic studies here present a molecular basis for this difference. Analytical ultracentrifugation experiments show that mature caspase-1 exists predominantly as a monomer under physiological concentrations that undergoes dimerization in the presence of substrate; specifically, substrate binding shifts the KD for dimerization by 20-fold. We have created a hemi-active site-labeled dimer of caspase-1, where one site is blocked with the covalent active site inhibitor, benzyloxycarbonyl-Val-Ala-Asp-fluoromethylketone. This hemi-labeled enzyme is about 9-fold more active than the apo-dimer of caspase-1. These studies suggest that substrate not only drives dimerization but also, once bound to one site in the dimer, promotes an active conformation in the other monomer. Steady-state kinetic analysis and modeling independently support this model, where binding of one substrate molecule not only increases substrate binding in preformed dimers but also drives the formation of heterodimers. Thus, the cooperativity in caspase-1 is driven both by substrate-induced dimerization as well as substrate-induced activation. Substrate-induced dimerization and activation seen in caspase-1 and not in caspase-3 may reflect their biological roles. Whereas caspase-1 cleaves a dramatically smaller number of cellular substrates that need to be concentrated near inflammasomes, caspase-3 is a constitutively active dimer that cleaves many more substrates located diffusely throughout the cell.