The transcriptional coregulator αNAC (Nascent polypeptide associated complex And Coregulator alpha) and the transcriptional repressor FIAT (Factor Inhibiting ATF4-mediated Transcription) interact but the biological relevance of this interaction remains unclear. The activity of αNAC is extensively modulated by post-translational modifications (PTMs). We identified a novel αNAC PTM through covalent attachment of the Small Ubiquitin-like MOdifier (SUMO1). Recombinant αNAC was a SUMO1 target in in vitro SUMOylation assays and we confirmed that αNAC is conjugated to SUMO1 in cultured osteoblasts and in calvarial tissue. The amino acid sequence of αNAC contains one copy of the composite “phospho-sumoyl switch” motif that couples sequential phosphorylation and SUMOylation. We found that αNAC is selectively SUMOylated at lysine residue 127 within the motif and that SUMOylation is enhanced when a phosphomimetic mutation is introduced at the nearby serine residue 132. SUMOylation did not alter the DNA-binding capacity of αNAC. The S132D, hyper-SUMOylated αNAC mutant specifically interacted with histone deacetylase-2 (HDAC2) and enhanced the inhibitory activity of FIAT on ATF4-mediated transcription from the Osteocalcin gene promoter. This effect required binding of SUMOylated αNAC to the target promoter. We propose that maximal transcriptional repression by FIAT requires its interaction with SUMOylated, HDAC2-interacting αNAC. J. Cell. Biochem. 115: 866–873, 2014. © 2013 Wiley Periodicals, Inc.