Baculovirus p35 prevents programmed cell death in diverse organisms and encodes a protein inhibitor (P35) of the CED-3/interleukin-1 beta-converting enzyme (ICE)-related proteases. By using site-directed mutagenesis, we have identified P35 domains necessary for suppression of virus-induced apoptosis in insect cells, the context in which P35 evolved. During infection, P35 was cleaved within an essential domain at or near the site DQMD-87G required for cleavage by CED-3/ICE family proteases. Cleavage site substitution of alanine for aspartic acid at position 87 (D87A) of the P-1 residue abolished P35 cleavage and antiapoptotic activity. Although the P-4 residue substitution D84A also caused loss of apoptotic suppression, it did not eliminate cleavage and suggested that P35 cleavage is not sufficient for antiapoptotic activity. Apoptotic insect cells contained a CED-3/ICE-like activity that cleaved in vitro-translated P35 and was inhibited by recombinant wild-type P35 but not P-1- or P-4-mutated P35. Thus, baculovirus infection directly or indirectly activates a novel CED-3/ICE-like protease that is inhibited by P35, thereby preventing virus-induced apoptosis. Our findings confirmed the inhibitory activity of P35 towards the CED-3/ICE proteases, including recombinant mammalian enzymes, and were consistent with a mechanism involving P35 stoichiometric interaction and cleavage. P35's inhibition of phylogenetically diverse proteases accounts for its general effectiveness as an apoptotic suppressor.