The Srs2 DNA helicase of Saccharomyces cerevisiae affects recombination in multiple ways. Srs2 not only inhibits recombination at stalled replication forks but also promotes the synthesis-dependent strand annealing (SDSA) pathway of recombination. Both functions of Srs2 are regulated by sumoylation--sumoylated PCNA recruits Srs2 to the replication fork to disfavor recombination, and sumoylation of Srs2 can be inhibitory to SDSA in certain backgrounds. To understand Srs2 function, we characterize the mechanism of its sumoylation in vitro and in vivo. Our data show that Srs2 is sumoylated at three lysines, and its sumoylation is facilitated by the Siz SUMO ligases. We also show that Srs2 binds to SUMO via a C-terminal SUMO-interacting motif (SIM). The SIM region is required for Srs2 sumoylation, likely by binding to SUMO-charged Ubc9. Srs2's SIM also cooperates with an adjacent PCNA-specific interaction site in binding to sumoylated PCNA to ensure the specificity of the interaction. These two functions of Srs2's SIM exhibit a competitive relationship: sumoylation of Srs2 decreases the interaction between the SIM and SUMO-PCNA, and the SUMO-PCNA-SIM interaction disfavors Srs2 sumoylation. Our findings suggest a potential mechanism for the equilibrium of sumoylated and PCNA-bound pools of Srs2 in cells.