The intrinsic, or mitochondrial, pathway of caspase activation is essential for apoptosis induction by various stimuli including cytotoxic stress. It depends on the cellular context, whether cytochrome c released from mitochondria induces caspase activation gradually or in an all-or-none fashion, and whether caspase activation irreversibly commits cells to apoptosis. By analyzing a quantitative kinetic model, we show that inhibition of caspase-3 (Casp3) and Casp9 by inhibitors of apoptosis (IAPs) results in an implicit positive feedback, since cleaved Casp3 augments its own activation by sequestering IAPs away from Casp9. We demonstrate that this positive feedback brings about bistability (i.e., all-or-none behaviour), and that it cooperates with Casp3-mediated feedback cleavage of Casp9 to generate irreversibility in caspase activation. Our calculations also unravel how cell-specific protein expression brings about the observed qualitative differences in caspase activation (gradual versus all-or-none and reversible versus irreversible). Finally, known regulators of the pathway are shown to efficiently shift the apoptotic threshold stimulus, suggesting that the bistable caspase cascade computes multiple inputs into an all-or-none caspase output. As cellular inhibitory proteins (e.g., IAPs) frequently inhibit consecutive intermediates in cellular signaling cascades (e.g., Casp3 and Casp9), the feedback mechanism described in this paper is likely to be a widespread principle on how cells achieve ultrasensitivity, bistability, and irreversibility.