The p53 tumour-suppressor guards the genome in response to genotoxic stress by transcriptional regulation of genes involved in cell-cycle control, DNA replication, repair and apoptosis such as p21, GADD45, bax and mdm2 (Cox and Lane, 1995). Mdm2 is classically considered to be an inhibitor of p53, that forms an auto-regulatory loop (Momand et al., 1992; Oliner et al., 1993; Wu et al., 1993; Chen et al., 1994; Chen and Levine, 1995). It immortalises cells containing wild type p53 and transforms them together with Ras (Finlay, 1993). We show that, in the absence of p53, mdm2 confers a growth advantage to cells (i.e. "transforms" them) and can overcome a G1 cell-cycl arrest induced by p107, a member of the pRb tumour-suppressor family (Adams and Kaelin, 1995). The minimum "transforming" and p107 inhibiting region of Mdm2 corresponds to its p53 binding domain. p53 inhibits transformation by Mdm2, apparently without requiring transcription. p53 can be considered to be a suppressor of Mdm2, a positive effector of the cell cycle. Mdm2 over-expression in tumours is reminiscent of p53 mutations with gain of function, in that Mdm2 both transforms cells and inhibits p53 activity.