Nucleophosmin (NPM, B23) is an abundant nucleolar phosphoprotein involved in ribosome biogenesis, and interacts with tumor suppressor proteins p53 and Rb. Here we show that NPM is a UV damage response protein that undergoes nucleoplasmic redistribution and regulates p53 and HDM2 levels and their interaction. By utilizing RNAi approaches and analyses of endogenous and ectopically expressed proteins, we demonstrate that NPM binds HDM2 and acts as a negative regulator of p53-HDM2 interaction. Viral stress, enforced by expression of Kaposi's sarcoma virus K cyclin, causes NPM redistribution, K cyclin-NPM association, and p53 stabilization by dissociation of HDM2-p53 complexes. The results demonstrate novel associations of HDM2 and K cyclin with NPM and implicate NPM as a crucial controller of p53 through inhibition of HDM2.