Discovery of emerging REGγ-regulated proteins has accentuated the REGγ-proteasome as an important pathway in multiple biological processes, including cell growth, cell cycle regulation, and apoptosis. However, little is known about the regulation of the REGγ-proteasome pathway. Here we demonstrate that REGγ can be SUMOylated in vitro and in vivo by SUMO-1, SUMO-2, and SUMO-3. The SUMO-E3 protein inhibitor of activated STAT (PIAS)1 physically associates with REGγ and promotes SUMOylation of REGγ. SUMOylation of REGγ was found to occur at multiple sites, including K6, K14, and K12. Mutation analysis indicated that these SUMO sites simultaneously contributed to the SUMOylation status of REGγ in cells. Posttranslational modification of REGγ by SUMO conjugation was revealed to mediate cytosolic translocation of REGγ and to cause increased stability of this proteasome activator. SUMOylation-deficient REGγ displayed attenuated ability to degrade p21(Waf//Cip1) due to reduced affinity of the REGγ SUMOylation-defective mutant for p21. Taken together, we report a previously unrecognized mechanism regulating the activity of the proteasome activator REGγ. This regulatory mechanism may enable REGγ to function as a more potent factor in protein degradation with a broader substrate spectrum.