Ubiquitylation targets proteins for proteasome-mediated degradation and plays important roles in many biological processes including apoptosis. However, non-proteolytic functions of ubiquitylation are also known. In Drosophila, the inhibitor of apoptosis protein 1 (DIAP1) is known to ubiquitylate the initiator caspase DRONC in vitro. Because DRONC protein accumulates in diap1 mutant cells that are kept alive by caspase inhibition ("undead" cells), it is thought that DIAP1-mediated ubiquitylation causes proteasomal degradation of DRONC, protecting cells from apoptosis. However, contrary to this model, we show here that DIAP1-mediated ubiquitylation does not trigger proteasomal degradation of full-length DRONC, but serves a non-proteolytic function. Our data suggest that DIAP1-mediated ubiquitylation blocks processing and activation of DRONC. Interestingly, while full-length DRONC is not subject to DIAP1-induced degradation, once it is processed and activated it has reduced protein stability. Finally, we show that DRONC protein accumulates in "undead" cells due to increased transcription of dronc in these cells. These data refine current models of caspase regulation by IAPs.