The CDK inhibitor p21waf1/cip1 is degraded by a ubiquitin-independent proteolytic pathway. Here, we show that MDM2 mediates this degradation process. Overexpression of wild-type or ring finger-deleted, but not nuclear localization signal (NLS)-deleted, MDM2 decreased p21waf1/cip1 levels without ubiquitylating this protein and affecting its mRNA level in p53(-/-) cells. This decrease was reversed by the proteasome inhibitors MG132 and lactacystin, by p19(arf), and by small interfering RNA (siRNA) against MDM2. p21waf1/cip1 bound to MDM2 in vitro and in cells. The p21waf1/cip1-binding-defective mutant of MDM2 was unable to degrade p21waf1/cip1. MDM2 shortened the half-life of both exogenous and endogenous p21waf1/cip1 by 50% and led to the degradation of its lysine-free mutant. Consequently, MDM2 suppressed p21waf1/cip1-induced cell growth arrest of human p53(-/-) and p53(-/-)/Rb(-/-)cells. These results demonstrate that MDM2 directly inhibits p21waf1/cip1 function by reducing p21waf1/cip1 stability in a ubiquitin-independent fashion.