During the execution of differentiation programs, lineage-specific transcription factors are in competition with antagonistic factors that drive progenitor proliferation. Thus, the myeloid transcription factor MafB promotes macrophage differentiation of myeloid progenitors, but a constitutively active Myb transcription factor (v-Myb) can maintain proliferation and block differentiation. Little is known, however, about the regulatory mechanisms that control such competing activities. Here we report that the small ubiquitin-like protein SUMO-1 can modify MafB in vitro and in vivo on lysines 32 and 297. The absence of MafB SUMO modification increased MafB-driven transactivation and macrophage differentiation potential but inhibited cell cycle progression and myeloid progenitor growth. Furthermore, we observed that direct repression of MafB transactivation by v-Myb was strictly dependent on MafB SUMO modification. Consequently, a SUMOylation-deficient MafB K32R K297R (K32,297R) mutant could specify macrophage fate even after activation of inducible Myb alleles and resist their differentiation-inhibiting activity. Our findings suggest that SUMO modification of MafB affects the balance between myeloid progenitor expansion and terminal macrophage differentiation by controlling MafB transactivation capacity and susceptibility to Myb repression. SUMO modification of lineage-specific transcription factors may thus modulate transcription factor antagonism to control tissue homeostasis in the hematopoietic system.