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The inhibitor-of-apoptosis proteins (IAPs) regulate programmed cell death by inhibiting members of the caspase family of enzymes. Recently, a mammalian protein called Smac (also named DIABLO) was identified that binds to the IAPs and promotes caspase activation. Although undefined in the X-ray structure, the amino-terminal residues of Smac are critical for its function. To understand the structural basis for molecular recognition between Smac and the IAPs, we determined the solution structure of the BIR3 domain of X-linked IAP (XIAP) complexed with a functionally active nine-residue peptide derived from the N terminus of Smac. The peptide binds across the third beta-strand of the BIR3 domain in an extended conformation with only the first four residues contacting the protein. The complex is stabilized by four intermolecular hydrogen bonds, an electrostatic interaction involving the N terminus of the peptide, and several hydrophobic interactions. This structural information, along with the binding data from BIR3 and Smac peptide mutants reported here, should aid in the design of small molecules that may be used for the treatment of cancers that overexpress IAPs.