The adenovirus E1B 55-kDa protein is a potent inhibitor of p53-mediated transactivation and apoptosis. The proposed mechanisms include tethering the E1B repression domain to p53-responsive promoters via direct E1B-p53 interaction. Cytoplasmic sequestration of p53 by the 55-kDa protein would impose additional inhibition on p53-mediated effects. To investigate further the role of cytoplasmic sequestration of p53 in its inhibition by the E1B 55-kDa protein we systematically examined domains in both the Ad12 55-kDa protein and p53 that underpin their colocalization in the cytoplasmic body and show that the N-terminal transactivation domain (TAD) of p53 is essential for retaining p53 in the cytoplasmic body. Deletion of amino acids 11 to 27 or even point mutation L22Q/W23S abolished the localization of p53 to the cytoplasmic body, whereas other parts of TAD and the C-terminal domain of p53 are dispensable. This cytoplasmic body is distinct from aggresome associated with overexpression of some proteins, since it neither altered vimentin intermediate filaments nor associated with centrosome or ubiquitin. Formation of this structure is sensitive to mutation of the Ad12 55-kDa protein. Strikingly, mutation S476/477A near the C terminus of the Ad12 55-kDa protein eliminated the formation of the cytoplasmic body. The equivalent residues in the Ad5 55-kDa protein were shown to be critical for its ability to inhibit p53. Indeed, Ad12 55-kDa mutants that cannot form a cytoplasmic body can no longer inhibit p53-mediated effects. Conversely, the Ad12 55-kDa protein does not suppress p53 mutant L22Q/W23S-mediated apoptosis. Finally, we show that E1B can still sequester p53 that contains the mitochondrial import sequence, thereby potentially preventing the localization of p53 to mitochondria. Thus, cytoplasmic sequestration of p53 by the E1B 55-kDa protein plays an important role in restricting p53 activities.