The nuclear import receptor Kap114 carries transcription factors and other cargos across nuclear pores into the nucleus. Here we show that yeast Kap114 is modified by SUMO (small ubiquitin-related modifier) and that sumoylation is required for Kap114-mediated nuclear import. Among the four known SUMO-specific E3 ligases in yeast, Mms21 is the preferred E3 enzyme responsible for the covalent attachment of SUMO to the Kap114 protein. Kap114 is sumoylated on lysine residue 909, which is part of a ΨKxD/E sumoylation consensus motif. Kap114 containing a lysine-to-arginine point mutation at position 909 mislocalizes to the nucleus and is defective in promoting nuclear import. Similarly, mutants defective in sumoylation or desumoylation specifically accumulate Kap114 in the nucleus and are blocked in import of Kap114 cargos. Ran-GTP is not sufficient to disassemble Kap114/cargo complexes, which necessitates additional cargo release mechanisms in the nucleus. Remarkably, sumoylation of Kap114 greatly stimulates cargo dissociation in vitro. We propose that sumoylation occurs at the site of Kap114 cargo function and that SUMO is a cargo release factor involved in intranuclear targeting.