Protein inhibitor of activated STATs (PIAS) proteins were initially identified as negative regulators of cytokine signalling that inhibit the activity of STAT-transcription factors. Evidence is accumulating that PIAS proteins function as transcriptional coregulators in various other important cellular pathways, including Wnt signalling, the p53 pathway and steroid hormone signalling. Most interestingly, recent work from several laboratories revealed that PIAS proteins act as E3-like ligases that stimulate the attachment of the ubiquitin-like SUMO modifier to target proteins acting in these pathways. Since in most cases the SUMO ligase activity and the transcriptional coregulator activity are functionally correlated, the PIAS/SUMO pathway appears to be an important mechanism of transcriptional regulation. In this review we will discuss some key findings that exemplify the role of PIAS proteins in the regulation of transcriptional processes and propose a model how the PIAS/ SUMO system may modulate transcriptional activities by mediating the assembly of coactivator or corepressor complexes within distinct subnuclear structures.