Understanding function and specificity of de-ubiquitylating enzymes (DUBs) is a major goal of current research, since DUBs are key regulators of ubiquitylation events and have been shown to be mutated in human diseases. Most DUBs are cysteine proteases, relying on a catalytic triad of cysteine, histidine and aspartate to cleave the isopeptide bond between two ubiquitin units in a poly-ubiquitin chain. We have discovered that the two Drosophila melanogaster homologues of human OTUD4, CG3251 and Otu, contain a serine instead of a cysteine in the catalytic OTU (ovarian tumor) domain. DUBs that are serine proteases instead of cysteine- or metallo-proteases have not been described. In line with this, neither CG3251 nor Otu protein were active to cleave ubiquitin chains. Re-introduction of a cysteine in the catalytic center did not render the enzymes active, indicating that further critical features for ubiquitin binding or cleavage have been lost in these proteins. Sequence analysis of OTUD4 homologues from various other species showed that within this OTU subfamily, loss of the catalytic cysteine has occurred frequently in presumably independent events, as well as gene duplications or triplications, suggesting DUB-independent functions of OTUD4 proteins. Using an in vivo RNAi approach, we show that CG3251 might function in the regulation of Inhibitor of Apoptosis (IAP)-antagonist-induced apoptosis, presumably in a DUB-independent manner.