Posttranslational modification by small ubiquitin-like modifier (SUMO) is a major regulator of transcription. We previously showed that progesterone receptors (PR) have a single consensus psiKXE SUMO-conjugation motif centered at Lys-388 in the N-terminal domain of PR-B and a homologous site of PR-A. SUMOylation of the PR is hormone-dependent and has a suppressive effect on transcription of an exogenous promoter. Here we show that repression of PR activity by SUMOylation at Lys-388 is uncoupled from phosphorylation, involves synergy between tandem progesterone response elements, and is associated with lowered ligand sensitivity and slowed ligand-dependent down-regulation. However, paradoxically, cellular overexpression of SUMO-1 increases PR transcriptional activity even if Lys-388 is mutated, suggesting that the receptors are activated indirectly by other SUMOylated proteins. One of these is the coactivator SRC-1, whose binding to PR and enhancement of agonist-dependent N-/C-terminal interactions is augmented by the presence of SUMO-1. Increased transcription due to SRC-1 is independent of PR SUMOylation based on assays with the Lys-388 mutants and the pure antiprogestin ZK98299, which blocks N-/C-terminal interactions. In summary, SUMOylation tightly regulates the transcriptional activity of PR by repressing the receptors directly while activating them indirectly through augmented SRC-1 coactivation.