diff --git a/monai/losses/dice.py b/monai/losses/dice.py
index 869dd05ac2..e4965d297e 100644
--- a/monai/losses/dice.py
+++ b/monai/losses/dice.py
@@ -803,9 +803,9 @@ def __init__(
         """
         super().__init__()
         self.dice = DiceLoss(
-            sigmoid=sigmoid,
-            softmax=softmax,
-            other_act=other_act,
+            sigmoid=False,
+            softmax=False,
+            other_act=None,
             squared_pred=squared_pred,
             jaccard=jaccard,
             reduction=reduction,
@@ -822,6 +822,9 @@ def __init__(
         self.lambda_focal = lambda_focal
         self.to_onehot_y = to_onehot_y
         self.include_background = include_background
+        self.sigmoid = sigmoid
+        self.softmax = softmax
+        self.other_act = other_act
 
     def forward(self, input: torch.Tensor, target: torch.Tensor) -> torch.Tensor:
         """
@@ -846,6 +849,17 @@ def forward(self, input: torch.Tensor, target: torch.Tensor) -> torch.Tensor:
             else:
                 target = one_hot(target, num_classes=n_pred_ch)
 
+        # Apply activation before removing background to ensure softmax/sigmoid works correctly
+        if self.sigmoid:
+            input = torch.sigmoid(input)
+        elif self.softmax:
+            if n_pred_ch == 1:
+                warnings.warn("single channel prediction, `softmax=True` ignored.")
+            else:
+                input = torch.softmax(input, 1)
+        elif self.other_act is not None:
+            input = self.other_act(input)
+
         if not self.include_background:
             if n_pred_ch == 1:
                 warnings.warn("single channel prediction, `include_background=False` ignored.")