Epithelial-mesenchymal transition (EMT) is important in embryonic development and tumorigenesis. Smad-interacting protein 1 (SIP1) can induce EMT by repressing the transcription of E-cadherin through recruitment of the corepressor C-terminal-binding protein (CtBP). How the activity of SIP1 is regulated still remains unclear. Here we show in vivo and in vitro that SIP1 is covalently modified by sumoylation at two conserved sites, Lys391 and Lys866. The polycomb protein Pc2, but not the PIAS (protein inhibitor of activated STAT) family proteins, acts as a Small ubiquitin-like modifier E3 ligase for SIP1. Sumoylation of SIP1 does not affect its subcellular localization, but regulates its transcriptional activity. Compared with the wild-type, a SIP1 sumoylation null mutant shows more potent repression on E-cadherin transcription but similar repression on two transforming growth factor-beta-responsive reporter genes and comparable activation on vitamin D3 receptor transcription. Coexpression of SIP1 with Pc2 can partially relieve E-cadherin repression by SIP1. We further show that SIP1 sumoylation disrupts the recruitment of CtBP. Thus SIP1 sumoylation regulates its transcriptional activity in a promoter context-dependent manner and may represent an important intervention target to modulate EMT in tumorigenesis.