Spinocerebellar ataxia type 7 (SCA7) is a polyglutamine (polyQ) disorder characterized by specific degeneration of cerebellar, brainstem and retinal neurons. Although they share little sequence homology, proteins implicated in CAG trinucleotide repeat disorders have common properties beyond their characteristic polyQ tract. These include the production of proteolytic fragments, nuclear accumulation, and processing by caspases. Here we report that ataxin-7 is cleaved specifically by caspase-7, and we map two putative caspase-7 cleavage sites to aspartic acid residues at positions 266 and 344 of the ataxin-7 protein. Site-directed mutagenesis of these two caspase-7 cleavage sites in the polyQ-expanded form of ataxin-7 produces an ataxin-7 D266N D344N protein that is resistant to caspase cleavage. While ataxin-7 displays toxicity, forms nuclear aggregates, and represses transcription in HEK 293T cells in a polyQ length-dependent manner, expression of the non-cleavable D266N D344N form of polyQ-expanded ataxin-7 attenuated cell death, aggregate formation, and transcriptional interference. Expression of the caspase-7 truncation product of ataxin-7-69Q or -92Q, which removes the putative NES and NLS's of ataxin-7, showed increased cellular toxicity. We also detected amino-terminal polyQ-expanded ataxin-7 cleavage products in SCA7 transgenic mice, and found them to be similar in size to those generated by caspase-7 cleavage. In a SCA7 transgenic mouse model, recruitment of caspase-7 into the nucleus by polyQ-expanded ataxin-7 correlated with its activation, a process that may involve a direct physical interaction based upon co-immunoprecipitation studies. Our results thus suggest that proteolytic processing of ataxin-7 by caspase-7 may contribute to SCA7 disease pathogenesis.