Retinoic acid receptor alpha (RARα) has a critical role in the differentiation process of osteosarcoma cells induced by all-trans retinoic acid (ATRA). However, degradation of RARα through ubiquitin proteasome pathway weakens the differentiation efficiency of osteosarcoma cells. In this study, we discover that murine double minute-2 (MDM2) acts as an E3 ubiquitin ligase to target RARα for degradation. We observe that MDM2 is required for RARα polyubiquitination and proteasomal degradation because downregulation of MDM2 by short hairpin RNA results in the accumulation of RARα, and MDM2 overexpression promotes the degradation of RARα. We also demonstrate that the N-terminal domain of MDM2 (amino acids 1-109) is the major RARα-binding site. Importantly, endogenous MDM2 levels are not only upregulated in human primary osteosarcoma blasts but are also inversely correlated with the level of osteopontin, which is a marker of bone differentiation. Moreover, MDM2 impairs the ATRA-induced osteoblastic differentiation of osteosarcoma cells, whereas an inhibitor of the MDM2 ubiquitin ligase synergizes with ATRA to enhance the differentiation of osteosarcoma cells and primary osteosarcoma blasts. Therefore, our study indicates that MDM2 serves as an E3 ubiquitin ligase to regulate the degradation of RARα and suggests that MDM2 is a novel therapeutic target for ATRA-based differentiation therapeutic approaches in osteosarcoma.