The steroid hormone 17beta-estradiol (estrogen) plays a significant role in the normal physiology of the mammary gland and breast cancer development primarily through binding to its receptor, the estrogen receptor alpha (ERalpha). ERalpha is a nuclear transcription factor undergoing different types of posttranslational modifications, i.e. phosphorylation, acetylation, and ubiquitination, which regulate its transcriptional activation and/or stability. Here we identify ERalpha as a new target for small ubiquitin-like modifier (SUMO)-1 modification in intact cells and in vitro. Moreover, ERalpha sumoylation occurs strictly in the presence of hormone. SUMO-1 appears to regulate ERalpha-dependent transcription. Using a series of mutants, we demonstrated that ERalpha is sumoylated at conserved lysine residues within the hinge region. Mutations that prevented SUMO modification impaired ERalpha-induced transcription without influencing ERalpha cellular localization. In addition to identifying protein inhibitor of activated signal transducer and activator of transcription (PIAS)1 and PIAS3 as E3 ligases for ERalpha, we also found that PIAS1 and PIAS3, as well as Ubc9, modulated ERalpha-dependent transcription independently from their SUMO-1 conjugation activity. These findings identify sumoylation as a new mechanism modulating ERalpha-dependent cellular response and provide a link between the SUMO and estrogen pathways.