The human oncoprotein MDM2 (hMDM2) overexpresses in various human tumors. If amplified, the mdm2 gene can enhance the tumorigenic potential of murine cells. Here, we present evidence to show that the full‐length human or mouse MDM2 expressed from their respective cDNA can inhibit the G 0/G 1–S phase transition of NIH 3T3 and normal human diploid cells. The protein harbors more than one cell‐cycle‐inhibitory domain that does not overlap with the p53‐interaction domain. Deletion mutants of hMDM2 that lack the cell‐cycle‐inhibitory domains can be stably expressed in NIH 3T3 cells, enhancing their tumorigenic potential. The tumorigenic domain of hMDM2 overlaps with the p53‐interaction domain. Some tumor‐derived cells, such as Saos‐2, H1299 or U‐2OS, are relatively insensitive to the growth‐inhibitory effects of hMDM2. These observations suggest that hMDM2 overexpression in response to oncogenic stimuli would induce growth arrest in normal cells. Elimination or inactivation of the hMDM2‐induced G 0/G 1 arrest may contribute to one of the steps of tumorigenesis.