Dysregulation of apoptosis is involved in a wide spectrum of disease ranging from proliferative to degenerative disorders. An emerging area of study in apoptosis is the critical contribution of the endoplasmic reticulum (ER) in both mitochondrial and ER specific apoptosis pathways. Here we show that brefeldin A and tunicamycin-mediated ER stress lead to caspase-dependent apoptosis involving caspase-2. Confocal microscopy and subcellular fractionation indicate that caspase-2 is localized to the ER, and following ER stress, the processing of caspase-2 and -9 is an early event preceding the activation of caspase-3 and -7 and the cleavage of the caspase substrate poly(ADP-ribose) polymerase (PARP). Inhibition and silencing of either caspase-2 or caspase-9 suppress ER stress-induced apoptosis, as demonstrated by annexin V binding. Similarly, transduction with an adenovirus encoding either Inhibitors of Apoptosis (IAP) protein HIAP1/c-IAP2 or HIAP2/c-IAP1 also suppresses ER stress-induced apoptosis. However, among HIAP1, HIAP2 and XIAP, only HIAP2 binds and inhibits caspase-2. Our results thus indicate a novel mechanism by which HIAP2 can regulate ER-initiated apoptosis by modulating the activity of caspase-2.