Daxx is essential for embryonic development and implicated in apoptosis and transcriptional regulation. It is found only in the animal kingdom and appears to arise first in insects. In the Drosophila genus, the Daxx orthologs are much larger than those in other species. Here we show that in addition to a conserved core of approximately 200 residues, Daxx possesses several conserved domains and two essentially invariable short SUMO-interacting motifs (SIMs), each located at one or the other terminus of the protein. Both can independently interact with SUMO. The Daxx I7/733K double mutant with one mutation in each of the two SIMs no longer interacts with SUMO. Daxx interacts with Ubc9 and this interaction strictly requires at least one SIM. Interestingly, the Ubc9 H20D mutation that abolishes non-covalent Ubc9-SUMO interaction also interrupts Daxx-Ubc9 interaction. Thus, SUMO serves as the intermediate for Daxx-Ubc9 interaction. Surprisingly, Daxx I7/733K double mutant could still colocalize with PML. Furthermore, wt Daxx also strongly colocalizes with PMLDeltaS mutant, in which all three sumoylation sites are mutated, whereas PMLDeltaS only weakly colocalizes with Daxx I7/733K mutant, suggesting that SIM-SUMO interaction is not essential for but enhances PML-Daxx interaction. Remarkably, Daxx strongly stimulates c-Jun-mediated transcription and both SIMs are required for this stimulation. PML also activates c-Jun, which requires all three sumoylation sites. Coexpression of Daxx and PML revealed that they independently regulate c-Jun, with Daxx exerting a dominant role. These results suggest that the conserved SIMs are involved in mediating protein-protein interactions that underlie Daxx's diverse cellular functions.