The intimate relationship between mediators of the ubiquitin (Ub)-signaling system and human diseases has sparked profound interest in how Ub influences cell death and survival. While the consequence of Ub attachment is intensely studied, little is known with regards to the effects of other Ub-like proteins (UBLs), and deconjugating enzymes that remove the Ub or UBL adduct. Systematic in vivo RNAi analysis identified three NEDD8-specific isopeptidases that, when knocked down, suppress apoptosis. Consistent with the notion that attachment of NEDD8 prevents cell death, genetic ablation of deneddylase 1 (DEN1) suppresses apoptosis. Unexpectedly, we find that Drosophila and human inhibitor of apoptosis (IAP) proteins can function as E3 ligases of the NEDD8 conjugation pathway, targeting effector caspases for neddylation and inactivation. Finally, we demonstrate that DEN1 reverses this effect by removing the NEDD8 modification. Altogether, our findings indicate that IAPs not only modulate cellular processes via ubiquitylation but also through attachment of NEDD8, thereby extending the complexity of IAP-mediated signaling.