The transcription factor p63 is expressed as at least six different isoforms, of which two have been assigned critical biological roles within ectodermal development and skin stem cell biology on the one hand and supervision of the genetic stability of oocytes on the other hand. These two isoforms contain a C-terminal inhibitory domain that negatively regulates their transcriptional activity. This inhibitory domain contains two individual components: one that uses an internal binding mechanism to interact with and mask the transactivation domain and one that is based on sumoylation. We have carried out an extensive alanine scanning study to identify critical regions within the inhibitory domain. These experiments show that a stretch of ~13 amino acids is crucial for the binding function. Further, investigation of transcriptional activity and the intracellular level of mutants that cannot be sumoylated suggests that sumoylation reduces the concentration of p63. We therefore propose that the inhibitory function of the C-terminal domain is in part due to direct inhibition of the transcriptional activity of the protein and in part due to indirect inhibition by controlling the concentration of p63. Keywords: p63, transcriptional regulation, auto-inhibition, sumoylation