Altered protein function due to mutagenesis plays an important role in disease development. This is perhaps most evident in tumorigenesis and the associated loss or gain of function of tumor-suppressor genes and oncogenes. The extent to which lesion-induced transcriptional mutagenesis (TM) influences protein function and its contribution to the development of disease is not well understood. In this study, the impact of O6-methylguanine on the transcription fidelity of p53 and the subsequent effects on the protein's function as a regulator of cell death and cell-cycle arrest were examined in human cells. Levels of TM were determined by RNA-sequencing. In cells with active DNA repair, misincorporation of uridine opposite the lesion occurred in 0.14% of the transcripts and increased to 14.7% when repair by alkylguanine-DNA alkyltransferase was compromised. Expression of the dominant-negative p53 R248W mutant due to TM significantly reduced the transactivation of several established p53 target genes that mediate the tumor-suppressor function, including CDKN1A (p21) and BBC3 (PUMA). This resulted in deregulated signaling through the retinoblastoma protein and loss of G1/S cell-cycle checkpoint function. In addition, we observed impaired activation of apoptosis coupled to the reduction of the tumor-suppressor functions of p53. Taking these findings together, this work provides evidence that TM can induce phenotypic changes in mammalian cells that have important implications for the role of TM in tumorigenesis.