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Clearance of apoptotic cells by phagocytic neighbors is crucial for normal development of multicellular organisms. However, how phagocytes discriminate between healthy and dying cells remains poorly understood. We focus on glial phagocytosis of apoptotic neurons during development of the Drosophila central nervous system. We identified phosphatidylserine (PS) as a ligand on apoptotic cells for the phagocytic receptor Six Microns Under (SIMU) and report that PS alone is not sufficient for engulfment. Our data reveal that, additionally to PS exposure, caspase activity is required for clearance of apoptotic cells by phagocytes. Here we demonstrate that SIMU recognizes and binds PS on apoptotic cells through its N-terminal EMILIN (EMI), Nimrod 1 (NIM1), and NIM2 repeats, whereas the C-terminal NIM3 and NIM4 repeats control SIMU affinity to PS. Based on the structure-function analysis of SIMU, we discovered a novel mechanism of internal inhibition responsible for differential affinities of SIMU to its ligand which might prevent elimination of living cells exposing PS on their surfaces. [ABSTRACT FROM AUTHOR]