The human genome is far smaller than originally estimated, and one explanation is that alternative splicing creates greater proteomic complexity than a simple count of open reading frames would suggest. The p53 homologue p63, for example, is a tetrameric transcription factor implicated in epithelial development and expressed as at least six isoforms with widely differing transactivation potential. In particular, p63α isoforms contain a 27-kDa C-terminal region that drastically reduces their activity and is of clear biological importance, since patients with deletions in this C terminus have phenotypes very similar to patients with mutations in the DNA-binding domain. We have identified a novel domain within this C terminus that is necessary and sufficient for transcriptional inhibition and which acts by binding to a region in the N-terminal transactivation domain of p63 homologous to the MDM2 binding site in p53. Based on this mechanism, we provide a model that explains the transactivation potential of homo- and heterotetramers composed of different p63 isoforms and their effect on p53.