Non-homologous end-joining (NHEJ) repairs DNA double-strand breaks by tethering and ligating the two DNA ends. The mechanisms regulating NHEJ efficiency and interplay between its components are not fully understood. Here, we identify and characterize the SUMOylation of budding yeast Lif1 protein, which is required for the ligation step in NHEJ. We show that Lif1 SUMOylation occurs throughout the cell cycle and requires the Siz SUMO ligases. Single-strand DNA, but not double-strand DNA or the Lif1 binding partner Nej1, is inhibitory to Lif1 SUMOylation. We identify lysine 301 as the major conjugation site and demonstrate that its replacement with arginine completely abolishes Lif1 SUMOylation in vivo and in vitro. The lif1-K301R mutant cells exhibit increased levels of NHEJ repair compared with wild-type cells throughout the cell cycle. This is likely due to the inhibitory effect of Lif1 SUMOylation on both its self-association and newly observed single-strand DNA binding activity. Taken together, these findings suggest that SUMOylation of Lif1 represents a new regulatory mechanism that downregulates NHEJ in a cell cycle phase-independent manner.