Small ubiquitin-like modifier 1 (SUMO-1) modification of IkappaBalpha has been described to actively participate in NFkappaB regulation. Following proteosomal degradation of IkappaBalpha, an auto-regulatory loop consisting of transcriptional activation of IkappaBalpha gene and SUMO-1 modification of newly synthesized IkappaBalpha proceeds. The SUMOylated IkappaBalpha form is resistant to signal-induced degradation, consequently halting NFkappaB activation. We describe a mechanistic model by which adenosine (Ado) signaling results in significant accumulation of SUMO-1 modified IkappaBalpha with subsequent attenuation of NFkappaB activation. Using models of hypoxia followed by reoxygenation (H/R), we have documented an H/R cycle-dependent increase in extracellular Ado correlating with increases in the cytoplasmic pool of IkappaBalpha/SUMO-1. We demonstrate a dose-dependent increase in IkappaBalpha/SUMO in cells treated with the general Ado receptor agonist NECA and abolished by Ado receptor antagonists. Experiments in cells exposed to cycles of H/R followed by hypoxia demonstrated differential patterns of SUMOylation and phosphorylation of IkappaBalpha, greatly impacting its proteosomal degradation by the 26 S proteasome. Assays targeting knockdown and overexpression of SUMO-1 demonstrated significant regulation of NFkappaB activation and NFkappaB-mediated gene transcription (interleukin-6). These results were confirmed in vivo using wild type and cd73 null mouse lung tissue. In summary, we present an endogenous mechanism by which cells and tissues acquire anti-inflammatory properties by recruiting a nondegradable form of IkappaBalpha, a major control point for NFkappaB activation via Ado signaling.