In Drosophila, SU(VAR)3-7 is an essential heterochromatin component. It is required for proper chromatin condensation, and changing its dose modifies position-effect variegation. Sumoylation is a post-translational modification shown to play a role in diverse biological processes. Here, we demonstrate that sumoylation is essential for proper heterochromatin function in Drosophila through modification of SU(VAR)3-7. Indeed, SU(VAR)3-7 is sumoylated at lysine K839; this modification is required for localization of SU(VAR)3-7 at pericentric heterochromatin, chromosome 4, and telomeres. In addition, sumoylation of SU(VAR)3-7 is a prerequisite for its ability to enhance position-effect variegation. Thus, these results show that the heterochromatic function of SU(VAR)3-7 depends on its own sumoylation, and unveil a role for sumoylation in Drosophila heterochromatin.