Programmed cell death in Caenorhabditis elegans requires activation of the caspase CED-3, which strictly depends on CED-4. CED-4 forms an octameric apoptosome, which binds the CED-3 zymogen and facilitates its autocatalytic maturation. Despite recent advances, major questions remain unanswered. Importantly, how CED-4 recognizes CED-3 and how such binding facilitates CED-3 activation remain completely unknown. Here we demonstrate that the L2' loop of CED-3 directly binds CED-4 and plays a major role in the formation of an active CED-4-CED-3 holoenzyme. The crystal structure of the CED-4 apoptosome bound to the L2' loop fragment of CED-3, determined at 3.2 Å resolution, reveals specific interactions between a stretch of five hydrophobic amino acids from CED-3 and a shallow surface pocket within the hutch of the funnel-shaped CED-4 apoptosome. Structure-guided biochemical analysis confirms the functional importance of the observed CED-4-CED-3 interface. Structural analysis together with published evidence strongly suggest a working model in which two molecules of CED-3 zymogen, through specific recognition, are forced into the hutch of the CED-4 apoptosome, consequently undergoing dimerization and autocatalytic maturation. The mechanism of CED-3 activation represents a major revision of the prevailing model for initiator caspase activation.