The p53 tumor suppressor is a transcription factor that is activated by diverse genotoxic and cytotoxic stresses. Upon activation, p53 prevents the proliferation of genetically unstable cells by regulating the expression of genes that initiate cell cycle arrest, apoptosis, and DNA repair. Consequently, p53 must be kept inactive in unstressed cells as its inappropriate activation can cause premature senescence and death. p53 inhibition occurs primarily through the E3 ubiquitin ligase, MDM2. Because MDM2 is also a p53 target gene, stresses paradoxically activate p53 while simultaneously increasing MDM2 expression. Therefore, a challenge has been to explain how the abundant MDM2 is prevented from inhibiting p53, thus ensuring that p53 can execute an appropriate stress response. Here we discuss a new mechanism for p53 activation involving DNA damage-induced auto-degradation of MDM2. Our data reveal that DNA damage leads to the destabilization of MDM2, which correlates with p53 stabilization and target gene induction. Conversely, p53 levels and activity decrease when MDM2 returns to a more stable state later in the stress response. The destabilization of MDM2 is required for p53 activation, as blocking MDM2 degradation via proteasome inhibition prevents p53 transactivation in DNA-damaged cells by enabling MDM2 to bind and inhibit p53. MDM2 destabilization is controlled by DNA damage-activated post-translational modifications and by its own RING domain, implying a possible role for the RING domain-interacting protein, MDMX, in regulating MDM2 stability. We propose that accelerated degradation of MDM2 limits its binding to p53 during a stress response and enables p53 to accumulate and remain active, even as p53 transcriptionally activates more MDM2. Thus, the induction of MDM2 RNA by activated p53 may create a reserve of MDM2 that can inactivate p53 once the DNA damage stimulus has abated and MDM2 is restabilized. As many tumors inactivate wild type p53 through MDM2 overexpression, exploiting the pathways that trigger MDM2 auto-degradation may be an important new strategy for chemotherapeutic intervention.