Insulin plays a central role in glucose homeostasis and is produced exclusively by pancreatic islet β-cells. Insulin gene transcription is regulated by a set of β-cell-enriched transcription factors that bind to cis-regulatory elements within the promoter region, and regulation of the insulin gene promoter is closely linked to β-cell functionality. PIASy, a member of the PIAS family of SUMO E3 ligases, is thought to affect insulin gene transcription, but its mechanism of action is not fully understood. Here, we demonstrate that PIASy interacts with MafA and represses insulin gene promoter activity. MafA is a β-cell-restricted basic leucine-zipper transcriptional activator that binds to the C1 element of the insulin gene promoter. In line with previous studies showing the transactivator domain of MafA is SUMOylated, PIASy enhanced the SUMOylation of MafA. However, a SUMOylation-deficient mutant of MafA was still repressed by PIASy, indicating that this modification is dispensable for repression. Using a series of MafA and PIASy mutants, we found that the basic domain of MafA and the amino-terminal region of PIASy containing the SAP domain are necessary for their interaction. In addition, SUMO-interacting motif 1 (SIM1) at the carboxyl-terminal region of PIASy was required to repress the synergistic transactivation of MafA, Pdx1, and Beta2, transcription factors playing central roles in β-cell differentiation and function. The PINIT and SP-RING domains in the middle region of PIASy were dispensable. These findings suggest that PIASy binds to MafA through the SAP domain and negatively regulates the insulin gene promoter through a novel SIM1-dependent mechanism.