Aurora kinases are central regulators of mitotic-spindle assembly, chromosome segregation and cytokinesis. Aurora B is a member of the chromosomal passenger complex (CPC) with crucial functions in regulation of the attachment of kinetochores to microtubules and in cytokinesis. We report here that Aurora B contains a conserved SUMO modification motif within its kinase domain. Aurora B can bind SUMO peptides in vitro when bound to the IN-box domain of its CPC partner INCENP. Mutation of Lys207 to arginine (Aurora B^K207R) impairs the formation of conjugates of Aurora B and SUMO in vivo. Expression of the SUMO-null form of Aurora B results in abnormal chromosome segregation and cytokinesis failure and it is not able to rescue mitotic defects in Aurora-B-knockout cells. These defects are accompanied by increased levels of the CPC on chromosome arms and defective centromeric function, as detected by decreased phosphorylation of the Aurora-B substrate CENP-A. The Aurora-B^K207R mutant does not display reduced kinase activity, suggesting that functional defects are probably a consequence of the altered localization, rather than decreased intrinsic kinase activity. These data suggest that SUMOylation of Aurora B modulates its function, possibly by mediating the extraction of CPC complexes from chromosome arms during prometaphase.