Synthetic inhibitor of apoptosis (IAP) antagonists induce degradation of IAP proteins such as cellular IAP1 (cIAP1), activate nuclear factor kappaB (NF-kappaB) signaling, and sensitize cells to tumor necrosis factor alpha (TNFalpha). The physiological relevance of these discoveries to cIAP1 function remains undetermined. We show that upon ligand binding, the TNF superfamily receptor FN14 recruits a cIAP1-Tnf receptor-associated factor 2 (TRAF2) complex. Unlike IAP antagonists that cause rapid proteasomal degradation of cIAP1, signaling by FN14 promotes the lysosomal degradation of cIAP1-TRAF2 in a cIAP1-dependent manner. TNF-like weak inducer of apoptosis (TWEAK)/FN14 signaling nevertheless promotes the same noncanonical NF-kappaB signaling elicited by IAP antagonists and, in sensitive cells, the same autocrine TNFalpha-induced death occurs. TWEAK-induced loss of the cIAP1-TRAF2 complex sensitizes immortalized and minimally passaged tumor cells to TNFalpha-induced death, whereas primary cells remain resistant. Conversely, cIAP1-TRAF2 complex overexpression limits FN14 signaling and protects tumor cells from TWEAK-induced TNFalpha sensitization. Lysosomal degradation of cIAP1-TRAF2 by TWEAK/FN14 therefore critically alters the balance of life/death signals emanating from TNF-R1 in immortalized cells.