p53, an important tumor suppressor protein, exerts its function mostly as a sequence-specific transcription factor and is subjected to multiple posttranslational modifications in response to genotoxic stress. Recently, we discovered that lysine methylation of p53 at K372 by Set7/9 (also known as SET7 and Set9) is important for transcriptional activation and stabilization of p53. In this report we provide a molecular mechanism for the effect of p53 methylation on transcription. We demonstrate that Set7/9 activity toward p53, but not the nucleosomal histones, is modulated by DNA damage. Significantly, we show that lysine methylation of p53 is important for its subsequent acetylation, resulting in stabilization of the p53 protein. These p53 modification events can be observed on the promoter of p21 gene, a known transcriptional target of p53. Finally, we show that methylation-acetylation interplay in p53 augments acetylation of histone H4 in the promoter of p21 gene, resulting in its subsequent transcriptional activation and, hence, cell cycle arrest. Collectively, these results suggest that the cross talk between lysine methylation and acetylation is critical for p53 activation in response to DNA damage and that Set7/9 may play an important role in tumor suppression.