Sumoylation is reversibly regulated by SUMO-specific proteases. We characterized a nucleolar SUMO-specific protease, SMT3IP1, which has a preference for SUMO-2/3. To elucidate SMT3IP1 function, we screened for its interacting Proteins that may be its substrates or regulate its activity. By using yeast two-hybrid screening, we identified nucleophosmin (NPM) as an SMT3IP1-binding partner. SMT3IP1 could preferentially remove SUMO-2 from sumoylated NPM. A catalytically inactive SMT3IP1 mutant increased intracellular accumulation of SUMO-2-modified NPM in a dominant-negative manner. Sumoylation of cytoplasmic mutated NPM was markedly elevated in an ARF-dependent manner. Despite the divergence in their localization, ectopic expression of SMT3IP1 could desumoylate a SUMO-2-modified NPM mutant. Additionally, genotoxic drugs caused the dissociation of NPM from nucleolar co-localization with SMT3IP1, but did not affect desumoylation of NPM by SMT3IP1. Our findings suggest that SMT3IP1 mediated desumoylation might control NPM physiological functions at both the nucleolus and other subcellular compartments. (C) 2008 Elsevier Inc. All rights reserved.