Cellular retinoic acid-binding protein II (CRABP-II) undergoes nuclear translocation upon binding of retinoic acid (RA). In the nucleus, CRABP-II directly binds to the nuclear receptor RAR to form a complex through which RA is "channeled" from the binding protein to the receptor. CRABP-II thus facilitates the ligation of RAR and markedly enhances its transcriptional activity. The primary sequence of CRABP-II contains three putative SUMOylation sites, centered at K45, K87, and K102. We show here that RA induces interactions of CRABP-II with the E2 SUMO ligase Ubc9 and triggers SUMOylation of the protein both in vitro and in cultured cells. Mutagenesis analyses demonstrate that K102 is the sole CRABP-II residue to be SUMOylated in response to RA. Mutation of this residue abolishes the ability of CRABP-II to undergo nuclear translocation in response RA and thus impairs CRABP-II-mediated activation of RAR. Additional observations demonstrate that apo-CRABP-II is associated with endoplasmic reticulum (ER), and that RA triggers the dissociation of CRABP-II from this location. Furthermore, we show that RA-induced dissociation of CRABP-II from the ER requires SUMOylation of K102. Hence, SUMOylation of K102 in response to RA binding is critical for dissociation of CRABP-II from ER and, consequently, for mobilization of the protein to nucleus and for its cooperation with RAR.