Small ubiquitin-like modifier (SUMO) modification of proteins (SUMOylation) and deSUMOylation have emerged as important regulatory mechanisms for protein function. SENP1 (SUMO-specific protease) deconjugates SUMOs from modified proteins. We have created SENP1 knockout (KO) mice based on a Cre-loxP system. Global deletion of SENP1 (SENP1 KO) causes anemia and embryonic lethality between embryonic day 13.5 and postnatal day 1, correlating with erythropoiesis defects in the fetal liver. Bone marrow transplantation of SENP1 KO fetal liver cells to irradiated adult recipients confers erythropoiesis defects. Protein analyses show that the GATA1 and GATA1-dependent genes are down-regulated in fetal liver of SENP1 KO mice. This down-regulation correlates with accumulation of a SUMOylated form of GATA1. We further show that SENP1 can directly deSUMOylate GATA1, regulating GATA1-dependent gene expression and erythropoiesis by in vitro assays. Moreover, we demonstrate that GATA1 SUMOylation alters its DNA binding, reducing its recruitment to the GATA1-responsive gene promoter. Collectively, we conclude that SENP1 promotes GATA1 activation and subsequent erythropoiesis by deSUMOylating GATA1.