The only reported role for the conjugation of the NEDD8 ubiquitin-like molecule is control of the activity of SCF ubiquitin ligase complexes. Here, we show that the Mdm2 RING finger E3 ubiquitin ligase can also promote NEDD8 modification of the p53 tumor suppressor protein. Mdm2 is itself modified with NEDD8 with very similar characteristics to the autoubiquitination activity of Mdm2. By using a cell line (TS-41) with a temperature-sensitive mutation in the NEDD8 conjugation pathway and a p53 mutant that cannot be NEDDylated (3NKR), we demonstrate that Mdm2-dependent NEDD8 modification of p53 inhibits its transcriptional activity. These findings expand the role for Mdm2 as an E3 ligase, providing evidence that Mdm2 is a common component of the ubiquitin and NEDD8 conjugation pathway and indicating the diverse mechanisms by which E3 ligases can control the function of substrate proteins.