Significance Conjugation of large polypeptides such as Neural precursor cell expressed, developmentally down-regulated 8 (Nedd8) and ubiquitin to proteins is a critical regulatory process for normal cell function. There are more than 1,000 E3 ligases that are involved in the ubiquitin pathway. The predominant activity of one E3, murine double minute-2 protein (Mdm2), has been characterized to mediate ubiquitination of the tumor suppressor p53 in response to genotoxic stress. We show that under growth conditions, active Src kinase binds to and phosphorylates Mdm2 at Y281 and Y302, which recruits the Nedd8 E2 enzyme, Ubc12. This recruitment converts Mdm2 to an E3 that neddylates p53. We provide the first evidence, to our knowledge, showing how phosphorylation may redirect ligase activity. This mechanism may be applicable to numerous E3 ligases and provides a basis for therapeutic intervention.