Covalent histone post-translational modifications such as acetylation, methylation, phosphorylation, and ubiquitylation play pivotal roles in regulating many cellular processes, including transcription, response to DNA damage, and epigenetic control. Although positive-acting post-translational modifications have been studied in Saccharomyces cerevisiae, histone modifications that are associated with transcriptional repression have not been shown to occur in this yeast. Here, we provide evidence that histone sumoylation negatively regulates transcription in S. cerevisiae. We show that all four core histones are sumoylated and identify specific sites of sumoylation in histones H2A, H2B, and H4. We demonstrate that histone sumoylation sites are involved directly in transcriptional repression. Further, while histone sumoylation occurs at all loci tested throughout the genome, slightly higher levels occur proximal to telomeres. We observe a dynamic interplay between histone sumoylation and either acetylation or ubiquitylation, where sumoylation serves as a potential block to these activating modifications. These results indicate that sumoylation is the first negative histone modification to be identified in S. cerevisiae and further suggest that sumoylation may serve as a general dynamic mark to oppose transcription.