The tumor suppressor p53 is inactivated by multiple mechanisms that include mutations of the p53 gene itself and increased levels of the p53 inhibitors MDM2 and MDM4. Mice lacking Mdm2 or Mdm4 exhibit embryo-lethal phenotypes that are completely rescued by concomitant deletion of p53. Here we show that Mdm2 and Mdm4 haploinsufficiency leads to increased p53 activity, exhibited as increased sensitivity to DNA damage and decreased transformation potential. Moreover, in in vivo tumor development, Eμ-myc Mdm4^+/− mice show a delayed onset of B-cell lymphomas compared to Eμ-myc mice. Additionally, Mdm2^+/−Mdm4^+/− double-heterozygous mice are not viable and exhibit defects in hematopoiesis and cerebellar development. The defects in Mdm2^+/−Mdm4^+/− mice are corrected by deletion of a single p53 allele. These findings highlight the exquisite sensitivity of p53 to Mdm2 and Mdm4 levels and suggest that some cell types may be more sensitive to therapeutic drugs that inhibit the Mdm-p53 interaction.