We have studied the regulation of the caspase-Activated DNase (CAD) by its inhibitor, ICAD. To study the role of ICAD short and long splice forms ICAD-S and ICAD-L, respectively, in vivo, we constructed chicken DT40 cell lines in which the entire coding regions of ICAD alone or ICAD plus CAD were deleted. ICAD and ICAD/CAD double knock-outs lacked both DNA fragmentation and nuclear fragmentation after the induction of apoptosis. We constructed a model humanized system in which human ICAD-L and CAD proteins expressed in DT40 ICAD/CAD double knock-out cells could rescue both DNA fragmentation and stage II chromatin condensation. ICAD-S could not replace ICAD-L as a chaperone for folding active CAD in these cells. However, a modified version of ICAD-S, in which the two caspase-3 cleavage sites were replaced with two tobacco etch virus (TEV) protease cleavage sites (ICAD-S(2TEV)) and which was therefore resistant to caspase cleavage, did inhibit CAD activation upon induction of apoptosis in vivo. Moreover, ICAD-L(2TEV) was functional as a chaperone for the production of active CAD in DT40 cells. In extracts prepared from these cells, we were able to activate CAD by cleavage of ICAD-L(2TEV) with TEV protease under non-apoptotic conditions. Thus, ICAD appears to be the only functional inhibitor of CAD activation in these cell-free extracts. Taken together, these observations indicate that ICAD-S may function together with ICAD-L as a buffer to prevent inappropriate CAD activation, particularly in cells where ICAD-S is the dominant form of ICAD protein.