A role of tumor-suppressive activity of p53 in the tumor microenvironment (TME) has been implicated but remains fairly understudied. To address this knowledge gap, we leveraged our MdmxS314A mice as recipients to investigate how implanted tumor cells incapacitate host p53 creating a conducive TME for tumor progression. We found that tumor cell-associated stress induced p53 downregulation in peritumor cells via an MDMX-Ser314 phosphorylation-dependent manner. As a result, an immunosuppressive TME was developed, as reflected by diminished immune cell infiltration into tumors and compromised macrophage M1 polarization. Remarkably, ablation of MDMX-Ser314 phosphorylation attenuated p53 decline in peritumor cells, which was associated with mitigation of immunosuppression and significant tumor growth delay. Our data collectively uncover a novel role of p53 in regulating the tumor immune microenvironment, suggesting that p53 restoration in the TME can be exploited as a potential strategy of anticancer therapy.