The small ubiquitin-related modifier SUMO posttranslationally modifies many proteins with roles in diverse processes including regulation of transcription, chromatin structure, and DNA repair. Similar to nonproteolytic roles of ubiquitin, SUMO modification regulates protein localization and activity. Some proteins can be modified by SUMO and ubiquitin, but with distinct functional consequences. It is possible that the effects of ubiquitination and SUMOylation are both largely due to binding of proteins bearing specific interaction domains. Both modifications are reversible, and in some cases dynamic cycles of modification may be required for activity. Studies of SUMO and ubiquitin in the nucleus are yielding new insights into regulation of gene expression, genome maintenance, and signal transduction.