The Drosophila innate immune system discriminates between pathogens and responds by inducing the expression of specific antimicrobial peptide-encoding genes through distinct signaling cascades. Fungal infection activates NF-kappaB-like transcription factors via the Toll pathway, which also regulates innate immune responses in mammals. The pathways that mediate antibacterial defenses, however, are less defined. We have isolated loss-of-function mutations in the caspase encoding gene dredd, which block the expression of all genes that code for peptides with antibacterial activity. These mutations also render flies highly susceptible to infection by gram-negative bacteria. Our results demonstrate that Dredd regulates antibacterial peptide gene expression, and we propose that Dredd, Immune Deficiency and the P105-like rel protein Relish define a pathway that is required to resist gram-negative bacterial infections.