The present invention relates to novel classes of compounds which are caspase inhibitors, in particular interleukin-1.beta. converting enzyme ("ICE") inhibitors. This invention also relates to pharmaceutical compositions comprising these compounds. The compounds and pharmaceutical compositions of this invention are particularly well suited for inhibiting caspase activity and consequently, may be advantageously used as agents against interleukin-1-("IL-1"), apoptosis-, interferon-.gamma. inducing factor-(IGIF), or interferon-.gamma.-("IFN-.gamma.") mediated diseases, including inflammatory diseases, autoimmune diseases, destructive bone disorders, proliferative disorders, infectious diseases, and degenerative diseases. This invention also relates to methods for inhibiting caspase activity and decreasing IGIF production and IFN-.gamma. production and methods for treating interleukin-1, apoptosis-, and interferon-.gamma.-mediated diseases using the compounds and compositions of this invention. This invention also relates to methods of preparing the compounds of this invention.