Sox9 and the closely related factor Sox10 are essential for the formation of neural crest precursor cells, and play divergent roles in the process by which these cells are subsequently directed to form specific derivatives. These group E Sox factors have also been implicated in the development of the vertebrate inner ear. Despite their importance, however, the mechanisms that allow SoxE proteins to regulate such a diverse range of cell types have remained poorly understood. Here we demonstrate that during vertebrate development, the activities of individual SoxE factors are well conserved and are regulated by SUMOylation. We show that SoxE mutants that cannot be SUMOylated, or that mimic constitutive SUMOylation, are each able to mediate a subset of the diverse activities characteristic of wild-type SoxE proteins. These findings provide important mechanistic insight into how the activity of widely deployed developmental regulatory proteins can be directed to specific developmental events.