The transcription factor p53 is a multifunctional tumor suppressor that arrests the cell cycle in response to stress and modulates the DNA repair process or induces apoptosis. The cellular level and activity of p53 are tightly controlled to maintain proper functioning. This study identified a novel p53-binding glycoprotein, gene related to anergy in lymphocytes (Grail), which formed a negative feedback loop (similar to that of Mdm2). Grail physically and functionally interacted with the N-terminus of p53 to target its degradation and modulate its transactivation activity. Grail also senses and regulates cellular p53 levels, modulates a panel of p53-targeted promoters, and has a role in p53-induced apoptosis in cultured cells. Overexpression of Grail inhibited p53-induced apoptosis by increasing p53 degradation. However, cells not expressing Grail failed to undergo p53-dependent apoptosis, resulting in p21-dependent G1 arrest. Thus, Grail may provide a novel regulatory route for controlling p53 activity under stress conditions.