The tumor suppressor p53 is a transcription factor that responds to cellular stresses by initiating cell cycle arrest or apoptosis. One transcriptional target of p53 is Mdm2, an E3 ubiquitin ligase that interacts with p53 to promote its proteasomal degradation in a negative feedback regulatory loop. Here we show that the wild-type p53-induced phosphatase 1 (Wip1), or PPM1D, downregulates p53 protein levels by stabilizing Mdm2 and facilitating its access to p53. Wip1 interacts with and dephosphorylates Mdm2 at serine 395, a site phosphorylated by the ATM kinase. Dephosphorylated Mdm2 has increased stability and affinity for p53, facilitating p53 ubiquitination and degradation. Thus, Wip1 acts as a gatekeeper in the Mdm2-p53 regulatory loop by stabilizing Mdm2 and promoting Mdm2-mediated proteolysis of p53.