Caspase 8 is an initiator caspase that is activated by death receptors to initiate the extrinsic pathway of apoptosis. Caspase 8 activation involves dimerization and subsequent interdomain autoprocessing of caspase 8 zymogens, and recently published work has established that elimination of the autoprocessing site of caspase 8 abrogates its pro-apoptotic function while leaving its proliferative function intact. The observation that the developmental abnormalities of caspase 8-deficient mice are shared by mice lacking the dimerization adapter FADD (Fas-associated death domain) or the caspase paralogue FLIP(L) [FLICE (FADD-like interleukin 1β-converting enzyme)-inhibitory protein, long form] has led to the hypothesis that FADD-dependent formation of heterodimers between caspase 8 and FLIP(L) could mediate the developmental role of caspase 8. In the present study, using an inducible dimerization system we demonstrate that cleavage of the catalytic domain of caspase 8 is crucial for its activity in the context of activation by homodimerization. However, we find that use of FLIP(L) as a partner for caspase 8 in dimerization-induced activation rescues the requirement for intersubunit linker proteolysis in both protomers. Moreover, before processing, caspase 8 in complex with FLIP(L) does not generate a fully active enzyme, but an attenuated species able to process only selected natural substrates. Based on these results we propose a mechanism of caspase 8 activation by dimerization in the presence of FLIP(L), as well as a mechanism of caspase 8 functional divergence in apoptotic and non-apoptotic pathways.