Smad4 plays a key role in TGF-β (transforming growth factor β)/Smad-mediated transcriptional responses. We show that Smad4 is sumoylated both in vivo and in vitro. Recent studies showed that sumoylation of Smad4 regulated its stability, but the effect of sumoylation on the intrinsic transcriptional activity of Smad4 was not defined. We show that overexpression of SUMO (small ubiquitin-related modifier)-1 and Ubc9 can inhibit a TGF-β-responsive reporter gene, whereas co-transfection with SUMO-1 protease-1 (SuPr-1) can increase the TGF-β response. We show further that mutation of the Smad4 sumoylation sites or co-transfection with SuPr-1 greatly increases Smad4 transcriptional activity. Moreover, direct fusion of SUMO-1 to the sumoylation mutant Smad4 potently inhibits its transcriptional activity. Thus, as it is being rapidly discovered that sumoylation inhibits the activities of many transcription factors, sumoylation also represses Smad4 transcriptional activity. The net effect of sumoylation of Smad4 can therefore be either stimulatory or inhibitory, depending on the target promoter that is analysed.