AbstractZinc finger of the cerebellum (Zic) proteins act as classical transcription factors to promote transcription of the Foxd3 gene during neural crest cell specification. Additionally, they can act as co-factors that bind TCF molecules to repress WNT/β-catenin dependent transcription without contacting DNA. Here, we show ZIC activity at the neural plate border is influenced by WNT-dependent SUMOylation. In a high WNT environment, a lysine within the highly conserved ZF-NC domain of ZIC5 is SUMOylated, which decreases formation of the TCF/ZIC co-repressor complex and shifts the balance towards transcription factor function. The modification is critical in vivo, as a ZIC5 SUMO-incompetent mouse strain exhibits neural crest specification defects. This work reveals the function of the ZIC ZF-NC domain, provides in vivo validation of target protein SUMOylation, and demonstrates that WNT/β-catenin signalling directs transcription at non-TCF DNA binding sites. Furthermore, it can explain how WNT signals convert a broad domain of Zic ectodermal expression into a restricted domain of neural crest cell specification.