p53 ubiquitination is the principal mechanism by which p53 levels are regulated in the cell. HAUSP (also known as USP7) has been proposed to serve as a substrate-specific deubiquitinase of p53, and an increase in p53 levels was reported upon overexpression of HAUSP. We have disrupted the HAUSP genomic locus by homologous recombination and shown that HAUSP ablation results in a phenotype opposite to that predicted. Rather than decreasing p53 levels associated with increased p53 ubiquitination, the absence of HAUSP resulted in p53 accumulation accompanied by decreased p53 ubiquitination. The p53 protein in HAUSP-deficient cells was active, as assessed by the induction of its transcriptional targets and growth arrest. The basis for this phenotype was traced to the increased ubiquitination of MDM2, a negative regulator of p53 levels. These results demonstrate that MDM2, rather than p53, is the substrate for HAUSP under physiologic conditions and document a fascinating and unexpected twist to the regulation of the p53/MDM2 axis.