The GC box binding transcription factor Sp3 both activates and represses transcription. We have found that Sp3 activity is regulated by SUMO-1 modification. Endogenous Sp3 is sumoylated and localized to the nuclear periphery and in nuclear dots. Removal of SUMO-1 from Sp3 by mutation of the SUMO acceptor lysines or expression of the SUMO-1 protease SuPr-1 converted Sp3 to a strong activator with a diffuse nuclear localization. Covalent attachment of SUMO-1 to Sp3 by gene fusion was sufficient to repress Sp3-dependent transcription and relocalize Sp3 to the nuclear periphery and nuclear dots. These studies reveal a direct effect of SUMO-1 modification on activity of a dual function transcription factor and provide a mechanism for functional specificity within the Sp transcription factor family.