This is Version nr. 2 (28 Aug 2001) of the original paper (11 Apr 2001). Includes corrected typos.We analyze the one-loop ultraviolet sensitivity of the Higgs mass in a five-dimensional supersymmetric theory compactified on the orbifold S^1/Z_2, with superpotential localized on a fixed-point brane. Four-dimensional supersymmetry is broken by Scherk-Schwarz boundary conditions. Kaluza-Klein interactions are regularized by means of a brane Gaussian distribution along the extra dimension with length l_s\simeq\Lambda^{-1}_s, where \Lambda_s is the cutoff of the five-dimensional theory. The coupling of the n-mode, with mass M^{(n)}, acquires the n-dependent factor exp{-(M^{(n)}/\Lambda_s)^2/2}, which makes it to decouple for M^{(n)}\gg \Lambda_s. The sensitivity of the Higgs mass on \Lambda_s is strongly suppressed and quadratic divergences cancel by supersymmetry. The one-loop correction to the Higgs mass is finite and equals, for large values of \Lambda_s, the value obtained by the so-called KK-regularization.Work supported in part by CICYT, Spain, under contract AEN98-0816, and by EU under contracts HPRN-CT-2000-00152 and HPRN-CT-2000-00148.Peer reviewed