Dysregulation of the MDM2-p53 pathway is a commonly observed phenomenon in cancer, where overexpression or amplification of MDM2 leads to increased degradation of p53. This results in reduced levels of p53, leading to the loss of its tumor-suppressive functions. The study focused on investigating the role of Ubiquitin-specific protease 38 (USP38) in cancer and its interaction with the MDM2-p53 axis. We revealed that USP38 positively correlates with MDM2 and negatively correlates with p53 expression. Mechanistically, USP38 directly binds to MDM2, functioning as a deubiquitinating enzyme (DUB) to stabilize MDM2 and suppress p53 expression. Knockout of USP38 hindered cancer cell proliferation, migration, and invasion, and enhanced apoptosis. Moreover, USP38 deficiency increased sensitivity to chemotherapy drugs and promoted ferroptosis in gastric and breast cancer cell lines. Importantly, these effects were found to be dependent on p53, as the downregulation of p53 reversed the phenotypic changes induced by USP38 knockout. These findings shed light on the oncogenic role of USP38 by modulating the MDM2-p53 axis, providing valuable insights into the molecular mechanisms of USP38 in cancer and potential therapeutic strategies for gastric and breast cancer.