Oncogene-mediated cellular transformation is a multistep process involving activation of growth-promoting pathways as well as inactivation of tumor suppressors. We recently found that ISGylation of the p53 tumor suppressor is an important novel mechanism to control its stability. Here we identified that Isg15-dependent regulation of p53 can be enhanced by different oncogenes. We further show that the Src-mediated phosphorylation of p53 on Tyr126 and Tyr220 has a positive effect on p53 ISGylation by enhancing Herc5 binding. In turn, deletion of Isg15 results in accumulation and activation of native p53 in transformed cells thus increasing its anti-cancer activity and suppressing tumorigenesis in mice. We propose that Isg15-dependent degradation of p53 is an alternative pathway for oncogenes to regulate p53 activity, and thus is an attractive pathway for development of new anti-cancer drugs.