The tumor suppressor p53 activates transcription of the IER5 gene, which encodes an adapter protein of protein phosphatase PP2A. IER5 binds to both the B55 regulatory subunit of PP2A and PP2A's target proteins, facilitating PP2A/B55-catalyzed dephosphorylation of these proteins. Here, we show that IER5 functions as a positive regulator of p53 by inhibiting its ubiquitination, thereby increasing cellular p53 levels. Mechanistically, this effect of IER5 requires its nuclear localization and binding to both PP2A/B55 and the p53 ubiquitin E3 ligase MDM2. Importantly, IER5 fails to inhibit p53 ubiquitination in cells treated with the MDM2 inhibitor Nutlin-3. The IER5-PP2A/B55 complex dephosphorylates MDM2 at Ser166, leading to MDM2 ubiquitination and a reduction in nuclear MDM2. Altogether, our data provide evidence that IER5-PP2A/B55 regulates the nuclear balance between MDM2 and p53 via MDM2 dephosphorylation.