Mutations resulting in decreased activity of p53 tumor suppressor protein promote tumorigenesis. P53 protein levels are tightly regulated through the Ubiquitin Proteasome System (UPS). Several E3 ligases were shown to regulate p53 stability, including MDM2. Here we report that the ubiquitin E3 ligase XIAP (X-linked Inhibitors of Apoptosis) is a direct ligase for p53 and describe a novel approach for modulating the levels of p53 by targeting the XIAP pathway. Using in vivo (live-cell) and in vitro (cell-free reconstituted system) ubiquitylation assays, we show that the XIAP-antagonist ARTS regulates the levels of p53 by promoting the degradation of XIAP. XIAP directly binds and ubiquitylates p53. In apoptotic cells, ARTS inhibits the ubiquitylation of p53 by antagonizing XIAP. XIAP knockout MEFs express higher p53 protein levels compared to wild-type MEFs. Computational screen for small molecules with high affinity to the ARTS-binding site within XIAP identified a small-molecule ARTS-mimetic, B3. This compound stimulates apoptosis in a wide range of cancer cells but not normal PBMC (Peripheral Blood Mononuclear Cells). Like ARTS, the B3 compound binds to XIAP and promotes its degradation via the UPS. B3 binding to XIAP stabilizes p53 by disrupting its interaction with XIAP. These results reveal a novel mechanism by which ARTS and p53 regulate each other through an amplification loop to promote apoptosis. Finally, these data suggest that targeting the ARTS binding pocket in XIAP can be used to increase p53 levels as a new strategy for developing anti-cancer therapeutics.