Tumour suppressor p53 levels in the cell are tightly regulated by controlled degradation through ubiquitin ligases including Mdm2, COP1, Pirh2, and ARF-BP1. The ubiquitination process is reversible via deubiquitinating enzymes, such as ubiquitin-specific peptidases (USPs). In this study, we identified ubiquitin-specific peptidase 4 (USP4) as an important regulator of p53. USP4 interacts directly with and deubiquitinates ARF-BP1, leading to the stabilization of ARF-BP1 and subsequent reduction of p53 levels. Usp4 knockout mice are viable and developmentally normal, but showed enhanced apoptosis in thymus and spleen in response to ionizing radiation. Compared with wild-type mouse embryonic fibroblasts (MEFs), Usp4-/- MEFs exhibited retarded growth, premature cellular senescence, resistance to oncogenic transformation, and hyperactive DNA damage checkpoints, consistent with upregulated levels and activity of p53 in the absence of USP4. Finally, we showed that USP4 is overexpressed in several types of human cancer, suggesting that USP4 is a potential oncogene.