Mutations in Sizn1 (Zcchc12), a novel transcriptional co-activator in the BMP signaling pathway, are associated with X-linked mental retardation. Previously, we demonstrated that Sizn1 positively modulates the BMP signal by interacting with Smad family members and cAMP-responsive element-binding protein-binding protein. To further define the molecular basis of Sizn1 function, we have explored its subcellular localization and generated various deletion mutants to carry out domain analyses. Here, we report that Sizn1 localizes to promyelocytic leukemia protein nuclear bodies (PML-NBs). Sizn1 deletion mutants that disrupt the MA homologous domain or the middle region fail to target to the PML-NB. We show that two SUMO interaction motifs (SIMs) in Sizn1 can bind to SUMO and govern SUMO conjugation to Sizn1 in the absence of the consensus motif for SUMO attachment. Interestingly, the SIM mutant Sizn1 localizes to nuclear bodies, but not to PML-NBs. Thus, SIMs mediate the localization of Sizn1 to PML-NB. Interestingly, mutations in SIM sequences and deletion of the MA homologous domain also affected the transcriptional co-activation function of a Sizn1. Taken together, our data indicate that the SIMs in Sizn1 are required for its PML-NB localization and for the full transcriptional co-activation function in BMP signaling.