Our previous study showed that ubiquitination of p53 is reversible and that the ubiquitin hydrolase HAUSP can stabilize p53 by deubiquitination. Here, we found that partial reduction of endogenous HAUSP levels by RNAi indeed destabilizes endogenous p53; surprisingly, however, nearly complete ablation of HAUSP stabilizes and activates p53. We further show that this phenomenon occurs because HAUSP stabilizes Mdm2 in a p53-independent manner, providing an interesting feedback loop in p53 regulation. Notably, HAUSP is required for Mdm2 stability in normal cells; in HAUSP-ablated cells, self-ubiquitinated-Mdm2 becomes extremely unstable, leading to indirect p53 activation. Furthermore, this feedback regulation is specific to Mdm2; in HeLa cells, where p53 is preferentially degraded by viral E6-dependent ubiquitination, depletion of HAUSP fails to activate p53. This study provides an example of an ubiquitin ligase (Mdm2) that is directly regulated by a deubiquitinase (HAUSP) and also reveals a dynamic role of HAUSP in the p53-Mdm2 pathway.