The sumoylation of CCAAT/enhancer-binding proteins (C/EBPs) by small ubiquitin-related modifier-1 (SUMO-1) has been reported recently. In this study, we investigated the functional role of the sumoylation of C/EBP␣ in the differentiation of hepatocytes. The amount of sumoylated C/EBP␣ gradually decreased during the differentiation, which suggests that the sumoylation is important for the control of growth/differentiation especially in the fetal liver. To analyze the function of the sumoylation of C/EBP␣ in liver-specific gene expression, we studied its effects on the expression of the albumin gene. The C/EBP␣-mediated transactivation of the albumin gene was reduced by sumoylation of C/EBP␣ in primary fetal hepatocytes. The enhancement of C/EBP␣-mediated transactivation by BRG1, a core subunit of the SWI/SNF chromatin remodeling complex, was hampered by sumoylation in a luciferase reporter assay. In addition, we discovered that sumoylation of C/EBP␣ blocked its inhibitory effect on cell proliferation by leading to the disruption of a proliferation-inhibitory complex because of a failure of the sumoylated C/EBP␣ to interact with BRG1. BRG1 was recruited to the dihydrofolate reductase promoter in nonproliferating C33a cells but was not detected in proliferating cells where C/EBP␣, BRG1, and SUMO-1 were overexpressed. This result suggests that BRG1 down-regulates the expression of the dihydrofolate reductase gene. These findings provide the insight that SUMO acts as a space regulator, which affects protein-protein interactions.The post-translational modification of proteins by small ubiquitin-related modifiers (SUMOs) 3 is an important regulatory mechanism that impinges on many cellular processes (1-4) because of the ability of SUMOs to cause rapid changes in the function and distribution of pre-existing proteins, subcellular structures, and multiprotein complexes (3). For example, the attachment of SUMO-1 to promyelocytic leukemia protein, Sp100, and Daxx is involved in the formation of nuclear subdomains such as the promyelocytic leukemia protein oncogenic domain (5). Moreover, the modification of SUMO-1 prevents the degradation of IB␣ by competing with ubiquitination (6). SUMO is a member of a family of ubiquitin-like proteins that can be covalently attached to a large number of proteins. The pathway of sumoylation resembles that of ubiquitination, although the conjugation of SUMO involves a different set of enzymes. SUMO is synthesized as a precursor protein and is processed at the C terminus by a class of cysteine proteases (7). Subsequently, the conjugation of SUMO to proteins involves the ATP-dependent heterodimeric SUMO-activating E1 enzyme (Aos1/Uba2). Once activated, SUMO is transferred to Ubc9, the E2-conjugating enzyme for SUMO, and attached to the ⑀-amino group of a specific lysine residue of a target protein that contains the consensus sequence KXE (, large hydrophobic residue) recognized by Ubc9 (8). Recently, SUMO E3 ligases have been identified in yeast and mammalian cells. An E3 ligase enhances t...