SALL4 is a transcription factor that plays a key role in the maintenance and self-renewal of embryonic stem cells and hematopoietic stem cells. Given that little is known about regulation of SALL4, we studied biochemical modifications of SALL4B, a major splicing variant of SALL4, and elucidated their biological function. SALL4B was primarily modified by ubiquitination when it was expressed in both Sf9 and HEK293T cells. A significant fraction of SALL4B was further modified by sumoylation when it was expressed in HEK293T cells. Constitutive SUMO-modification of SALL4B was also detected in Tera-1, a cell line of the teratocarcinoma origin. SALL4B sumoylation was independent of ubiquitination and lysine residues 156, 316, 374, and 401 were essential for sumoylation. Chromatin fraction contained more SUMO-deficient SALL4B. Despite a shorter half-life than the wild-type counterpart, SUMO-deficient SALL4B interacted with OCT4 more efficiently than the wild-type SALL4B. RNAi-mediated silencing of SALL4 expression caused significant down-regulation of both OCT4 and SOX2, which was rescued by ectopic expression of SALL4B but not by SUMO-deficient mutant. Significantly, compared with the wild-type SALL4B, SUMO-deficient mutant exhibited compromised trans-activation or trans-repression activities in reporter gene assays. Combined, our studies reveal sumoylation as a novel form of post-translational modification for regulating the stability, subcellular localization, and transcriptional activity of SALL4.