Upon activation, the apoptosis-inducing cell membrane receptor CD95 (APO-1/Fas) recruits a set of intracellular signaling proteins (CAP1-4) into a death-inducing signaling complex (DISC). In the DISC, CAP1 and CAP2 represent FADD/MORT1. CAP4 was identified recently as an ICE-like protease, FLICE, with two death effector domains (DED). Here we show that FLICE binds to FADD through its N-terminal DED. This is an obligatory step in CD95 signaling detected in the DISC of all CD95-sensitive cells tested. Upon prolonged triggering of CD95 with agonistic antibodies all cytosolic FLICE gets proteolytically activated. Physiological FLICE cleavage requires association with the DISC and occurs by a two-step mechanism. Initial cleavage generates a p43 and a p12 fragment further processed to a p10 fragment. Subsequent cleavage of the receptor-bound p43 results in formation of the prodomain p26 and the release of the active site-containing fragment p18. Activation of FLICE is blocked by the peptide inhibitors zVAD-fmk, zDEVD-fmk and zIETD-fmk, but not by crmA or Ac-YVAD-CHO. Taken together, our data indicate that FLICE is the first in a cascade of ICE-like proteases activated by CD95 and that this activation requires a functional CD95 DISC.