The inhibitor of apoptosis proteins (IAPs) represent the only endogenous caspase inhibitors and are characterized by the presence of baculoviral IAP repeats (BIRs). Here, we report the crystal structure of the complex between human caspase-7 and XIAP (BIR2 and the proceeding linker). The structure surprisingly reveals that the linker is the only contacting element for the caspase, while the BIR2 domain is invisible in the crystal. The linker interacts with and blocks the substrate groove of the caspase in a backward fashion, distinct from substrate recognition. Structural analyses suggest that the linker is the energetic and specificity determinant of the interaction. Further biochemical characterizations clearly establish that the linker harbors the major energetic determinant, while the BIR2 domain serves as a regulatory element for caspase binding and Smac neutralization.