Digestive organ expansion factor (Def) is a nucleolar protein that plays dual functions: it serves as a component of the ribosomal small subunit processome for the biogenesis of ribosomes and also mediates p53 degradation through the cysteine proteinase calpain-3 (CAPN3). However, nothing is known about the exact relationship between Def and CAPN3 or the regulation of the Def function. In this report, we show that CAPN3 degrades p53 and its mutant proteins p53A138V, p53M237I, p53R248W, and p53R273P but not the p53R175H mutant protein. Importantly, we show that Def directly interacts with CAPN3 in the nucleoli and determines the nucleolar localisation of CAPN3, which is a prerequisite for the degradation of p53 in the nucleolus. Furthermore, we find that Def is modified by phosphorylation at five serine residues: S50, S58, S62, S87, and S92. We further show that simultaneous phosphorylations at S87 and S92 facilitate the nucleolar localisation of Capn3 that is not only essential for the degradation of p53 but is also important for regulating cell cycle progression. Hence, we propose that the Def-CAPN3 pathway serves as a nucleolar checkpoint for cell proliferation by selective inactivation of cell cycle-related substrates during organogenesis.