p53 activation prevents the proliferation of genetically unstable cells. Conversely, p53 antagonism by its transcriptional target, the E3 ubiquitin ligase MDM2, is critical for the viability of unstressed, cycling cells. We demonstrate that MDM2 induces the degradation of p53 in both the nucleus and the cytoplasm. As p53 and MDM2 accumulate in the nuclei of stressed cells, we investigated mechanisms enabling p53 activation despite the high MDM2 levels generated during a DNA-damage response. We show that DNA damage destabilized MDM2 by a mechanism involving damage-activated kinases and MDM2 auto-ubiquitination. p53 was stable and transcriptionally active when MDM2 was unstable, but became unstable and inactive as the damage response waned and MDM2 stabilized. Importantly, blocking MDM2 destabilization in DNA-damaged cells prevented p53 target gene activation. Our data reveal that controlled MDM2 degradation is an important new step in p53 regulation.