Circular RNAs (circRNAs) are a class of noncoding RNAs produced by a noncanonical form of alternative splicing called back-splicing. To investigate a potential role of circRNAs in the p53 pathway, we analyzed RNA sequencing (RNA-seq) data from colorectal cancer cell lines (HCT116, RKO, and SW48) that were untreated or treated with a DNA-damaging agent. Surprisingly, unlike the strong p53-dependent induction of hundreds of p53-induced mRNAs upon DNA damage, only a few circRNAs were upregulated from p53-induced genes. circ-MDM2, an annotated circRNA from the MDM2 locus, was one of the handful of circRNAs that originated from a p53-induced gene. Given the central role of MDM2 in suppressing p53 protein levels and p53 activity, we investigated the function of circ-MDM2. Knocking down circ-MDM2 with small interfering RNAs (siRNAs) that targeted circ-MDM2 did not alter MDM2 mRNA or MDM2 protein levels but resulted in increased basal p53 levels and growth defects in vitro and in vivo. Consistent with these results, transcriptome profiling showed increased expression of several direct p53 targets, reduced retinoblastoma protein (Rb) phosphorylation, and defects in G1-S progression upon silencing circ-MDM2. Our results on the initial characterization of circ-MDM2 identify a new player from the MDM2 locus that suppresses p53 levels and cell cycle progression.