We identify ADAR1, an RNA-editing enzyme with transient nucleolar localization, as a novel substrate for sumoylation. We show that ADAR1 colocalizes with SUMO-1 in a subnucleolar region that is distinct from the fibrillar center, the dense fibrillar component, and the granular component. Our results further show that human ADAR1 is modified by SUMO-1 on lysine residue 418. An arginine substitution of K418 abolishes SUMO-1 conjugation and although it does not interfere with ADAR1 proper localization, it stimulates the ability of the enzyme to edit RNA both in vivo and in vitro. Moreover, modification of wild-type recombinant ADAR1 by SUMO-1 reduces the editing activity of the enzyme in vitro. Taken together these data suggest a novel role for sumoylation in regulating RNA-editing activity.