Caspases are executioners of apoptosis but also participate in a variety of vital cellular processes. Here, we identified Soti, an inhibitor of the Cullin-3-based E3 ubiquitin ligase complex required for caspase activation during Drosophila spermatid terminal differentiation (individualization). We further provide evidence that the giant inhibitor of apoptosis-like protein dBruce is a target for the Cullin-3-based complex, and that Soti competes with dBruce for binding to Klhl10, the E3 substrate recruitment subunit. We then demonstrate that Soti is expressed in a subcellular gradient within spermatids and in turn promotes proper formation of a similar dBruce gradient. Consequently, caspase activation occurs in an inverse graded fashion, such that the regions of the developing spermatid that are the last to individualize experience the lowest levels of activated caspases. These findings elucidate how the spatial regulation of caspase activation can permit caspase-dependent differentiation while preventing full-blown apoptosis.