Modification of proteins by small ubiquitin-like modifier (SUMO) plays an important role in the function, compartmentalization, and stability of target proteins, contributing to the regulation of diverse processes. SUMO-1 modification can be regulated not only at the level of conjugation; it may also be reversed by a class of proteases known as the SUMO-specific proteases. However, current understanding of the regulation, specificity, and function of these proteases remains limited. In this study, we characterize aspects of the compartmentalization and proteolytic activity of the mammalian SUMO-specific protease, SENP1, providing insight into its function and regulation. We demonstrate the presence of a single nonconsensus nuclear localization signal within the N terminus of the protein, the mutation of which results in pronounced cytoplasmic accumulation in contrast to the nuclear accumulation of the parental protein. In addition, we observe that the N terminus of the protein may be essential for the correct regulation of the protease, since expression of the core domain alone results in limited expression and loss of SUMO-1, indicative of constitutive catalytic activity. Consistent with the prediction that the protease is a member of the cysteine family of proteases, we mutated a key cysteine residue and observed that expression of this catalytic mutant had a dominant negative phenotype, resulting in the accumulation of high molecular weight SUMO-1 conjugates. Furthermore, we demonstrate that SENP1 may itself be a target for SUMO-1 modification occurring at a nonconsensus site. Finally, we demonstrate that SENP1 localization is influenced by expression and localization of SUMO-1-conjugated target proteins within the cell.