Protooncogene Ski was identified based on its ability to transform avian fibroblasts in vitro. In support of its oncogenic activity, SKI was found to be overexpressed in a variety of human cancers, although the exact molecular mechanism(s) responsible for its oncogenic activity is not fully understood. We found that SKI can negatively regulate p53 by decreasing its level through up-regulation of MDM2 activity, which is mediated by the ability of SKI to enhance sumoylation of MDM2. This stimulation of MDM2 sumoylation is accomplished through a direct interaction of SKI with SUMO-conjugating enzyme E2, Ubc9, resulting in enhanced thioester bond formation and mono-sumoylation of Ubc9. A mutant SKI defective in transformation fails to increase p53 ubiquitination and is unable to increase MDM2 levels and to increase mono-sumoylation of Ubc9, suggesting that the ability of SKI to enhance Ubc9 activity is essential for its transforming function. These results established a detailed molecular mechanism that underlies the ability of SKI to cause cellular transformation while unraveling a novel connection between sumoylation and tumorigenesis, providing potential new therapeutic targets for cancer.