The mdm2 oncogene encodes a 90-kDa protein that can bind to the p53 tumor suppressor protein and negatively regulate its functions in transcription, cell cycle arrest, and apoptosis. The mdm2 gene is frequently amplified in human sarcomas, which may be responsible for the malignant transformations. We present evidence that the mdm2 oncoprotein is cleaved by an interleukin 1beta-converting enzyme-like protease (caspase) during p53-mediated apoptosis. The protease that cleaves mdm2 has a specificity similar to that of CPP32 (caspase-3), and recombinant caspase-3 is able to cleave mdm2 in vitro. The protease cleavage site has been mapped to between residue 361 and 362 of human mdm2. The proteolytic cleavage removes the COOH-terminal RING finger domain of mdm2, resulting in the loss of RNA binding activity. The p53 binding and inhibition functions of mdm2 are not affected by the cleavage. The cleavage site sequence of mdm2 is evolutionarily conserved, suggesting that regulation by caspase cleavage during apoptosis is an important feature of mdm2.