The protein inhibitor of activated STAT (PIAS) family proteins regulates innate immune responses by controlling transcription induced by Toll-like receptor, RIG-I-like receptor signaling, and JAK/STAT pathways. Here, we show that PIASy negatively regulates type I interferon (IFN) transcription. Virus infection led to enhanced type I IFN induction in PIASy null cells, and conversely PIASy overexpression reduced IFN transcription. A mutation in the LXXLL motif of the SAP domain abolished inhibition of IFN-stimulated gene expression but did not affect virus or Toll-like receptor/RIG-I-like receptor-stimulated IFN transcription, indicating that PIASy employs distinct mechanisms to inhibit virus-induced and IFN-stimulated transcription. SUMO E3 activity was not required for PIASy inhibition of IFN transcription; however, PIASy relied on the SUMO modification mechanism to inhibit IFN transcription, because the activity of the SUMO-interacting motif was required for inhibition, and knockdown of SUMO E2 enzyme UBC9 decreased inhibitory activity of PIASy. Our results demonstrate that PIASy negatively regulates both IFN transcription and IFN-stimulated gene expression through multiple mechanisms utilizing the function of different domains.