Sp3 is a ubiquitously expressed member of the Sp family of transcription factors that encodes three proteins, Sp3, M1 and M2, with differing capacities to stimulate or repress transcription. As part of ongoing efforts to study the functions of Sp3 isoforms, we employed a yeast “two-hybrid” screen to identify Sp3-binding proteins. This screen resulted in the identification of Ubc9, a SUMO-1 conjugating enzyme, as an M2-binding protein, and consistent with these results sequence analyses identified consensus sumoylation motifs within several Sp family members. Western blots probed with anti-Sp3 detected a high molecular weight Sp3 isoform that is stabilized by a SUMO-1 hydrolase inhibitor, and this protein is also bound by anti-SUMO-1 antiserum. Transient transfection assays with epitope-tagged-SUMO-1 and GFP-SUMO-1 fusion proteins confirmed that Sp3, M1 and M2 proteins are sumoylated in vivo. Substitution of arginine for lysine at one putative site of sumoylation, lysine₅₅₁, blocked sumoylation of all Sp3 isoforms in vivo and led to a marginal increase in Sp3-mediated trans-activation in insect and mammalian cells. In contrast, introduction of this amino acid substitution within M1 converted it into a potent transcriptional trans-activator. We conclude that Sp3 isoforms are sumoylated in vivo and this post-translational modification plays an important role in the regulation of Sp3-mediated transcription.