Transcription factor Oct4 is a master regulator affecting the fate of pluripotent stem cells and germ cell precursors. Oct4 expression is tightly regulated, and small changes in expression level can have dramatic effects on differentiation or oncogenesis. Post-translational modifications including phosphorylation and ubiquitination have been reported to regulate Oct4 transcriptional activity. Here we show that Oct4 is a target for small ubiquitin-related modifier (SUMO)-1 modification in vivo and in vitro. Sumoylation of Oct4 occurs at a single lysine, Lys(118), located at the end of the amino-terminal transactivation domain and next to the Pit1-Oct-Unc86 (POU) DNA binding domain. SUMO-1 and Oct4 colocalize at several promoter sequences in vivo, and a fraction of Oct4 molecules colocalized with SUMO-1 in nuclear aggregates. Sumoylation of Oct4 led to significantly increased Oct4 stability and increased DNA binding. In addition, SUMO-1 cotransfection led to augmented Oct4 transactivation potential that was reduced when the Oct4 sumoylation target site was mutated. Therefore, sumoylation of Oct4 results in increased stability, DNA binding, and transactivation and provides an important mechanism to regulate Oct4 activity.