In response to genotoxic stress, the p53 tumor suppressor protein exerts a G(1) cell cycle arrest that is dependent on its ability to transactivate downstream target genes, This p53-dependent G, block is reversed by the binding of Mdm-2 to p53, preventing further transactivation. Interestingly, following DNA damage, the mdm-2 gene is also transcriptionally activated by p53, and therefore, the question of how p53 can continue to transactivate genes in the presence of its own negative regulator has remained unanswered, Here, we provide evidence that phosphorylation of Mdm-2 protein by DNA-dependent protein kinase (DNA-PK) blocks its ability to associate with p53 and regulate p53 transactivation, The data support a model by which DNA-FH activation by DNA damage and phosphorylation of Mdm-2 renders the Mdm-2 protein unable to inhibit p53 transactivation, resulting in cell cycle arrest. Following DNA repair, the loss of DNA-PK activity results in newly synthesized Mdm-2 protein that is unphosphorylated and, therefore, capable of binding to p53, allowing cell cycle progression.