Modulation of tumor suppressor activities may provide new opportunities for cancer therapy. Here we show that disruption of the gene Ppm1d encoding Wip1 phosphatase activated the p53 and p16 (also called Ink4a)–p19 (also called ARF) pathways through p38 MAPK signaling and suppressed in vitro transformation of mouse embryo fibroblasts (MEFs) by oncogenes. Disruption of the gene Cdkn2a (encoding p16 and p19), but not of Trp53 (encoding p53), reconstituted cell transformation in Ppm1d-null MEFs. In vivo, deletion of Ppm1d in mice bearing mouse mammary tumor virus (MMTV) promoter–driven oncogenes Erbb2 (also called c-neu) or Hras1 impaired mammary carcinogenesis, whereas reduced expression of p16 and p19 by methylation-induced silencing or inactivation of p38 MAPK correlated with tumor appearance. We conclude that inactivation or depletion of the Wip1 phosphatase with resultant p38 MAPK activation suppresses tumor appearance by modulating the Cdkn2a tumor-suppressor locus.