DNA fragmentation, a hallmark of apoptosis, is regulated by a specific nuclease called caspase-activated DNase (CAD) and its inhibitor (ICAD). When cell lysates from Drosophila S2 cells were chemically denatured and the denatured proteins were removed after dialysis, the supernatant inhibited Drosophila CAD (dCAD). To identify the inhibitor, we tested recombinant DREP-1, which was previously identified using the Drosophila EST data base and found it also inhibited dCAD DNase. An antibody against DREP-1 inhibited the ICAD activity in the S2 cell extracts, confirming the identification of DREP-1 as a Drosophila homolog of ICAD (dICAD). The recombinant DREP-1/dICAD was cleaved at a specific site by human caspase 3 as well as by extracts prepared from S2 cells undergoing apoptosis. Biochemical fractionation and immunoprecipitation of dICAD from S2 cell extracts indicated that dICAD is complexed with dCAD in proliferating cells. The expression of the caspase-resistant form of dICAD/DREP-1 in a Drosophila neuronal cell line prevented the apoptotic DNA fragmentation. Northern hybridization and the immunohistochemical analyses revealed that the expression of the dICAD gene is developmentally regulated.