The tumor suppressor p53 is stabilized and activated in response to cellular stress through post‐translational modifications including acetylation. p300/CBP‐mediated acetylation of p53 is negatively regulated by MDM2. Here we show that MDM2 can promote p53 deacetylation by recruiting a complex containing HDAC1. The HDAC1 complex binds MDM2 in a p53‐independent manner and deacetylates p53 at all known acetylated lysines in vivo. Ectopic expression of a dominant‐negative HDAC1 mutant restores p53 acetylation in the presence of MDM2, whereas wild‐type HDAC1 and MDM2 deacetylate p53 synergistically. Fibroblasts overexpressing a dominant negative HDAC1 mutant display enhanced DNA damage‐induced p53 acetylation, increased levels of p53 and a more pronounced induction of p21 and MDM2. These results indicate that acetylation promotes p53 stability and function. As the acetylated p53 lysine residues overlap with those that are ubiquitylated, our results suggest that one major function of p53 acetylation is to promote p53 stability by preventing MDM2‐dependent ubiquitylation, while recruitment of HDAC1 by MDM2 promotes p53 degradation by removing these acetyl groups.