Adherens junctions (AJs) are membrane-anchored structures composed of E-cadherin and associated proteins, including catenins and actin. The unique plasticity of AJs mediates both the rigidity and flexibility of cell-cell contacts essential for embryonic morphogenesis and adult tissue remodeling. We identified the SUMO protease ULP-2 as a regulator of AJ assembly and show that dysregulated ULP-2 activity impairs epidermal morphogenesis in Caenorhabditis elegans embryos. The conserved cytoplasmic tail of HMR-1/E-cadherin is sumoylated and is a target of ULP-2 desumoylation activity. Coupled sumoylation and desumoylation of HMR-1 are required for its recruitment to the subapical membrane during AJ assembly and the formation of the linkages between AJs and the apical actin cytoskeleton. Sumoylation weakens HMR-1 binding to HMP-2/β-catenin. Our study provides a mechanistic link between the dynamic nature of the SUMO machinery and AJ plasticity and highlight sumoylation as a molecular switch that modulates the binding of E-cadherin to the actin cytoskeleton.