Protein synthesis is crucial for the maintenance of long-term memory-related synaptic plasticity. The cytoplasmic polyadenylation element-binding protein 3 (CPEB3) regulates the translation of several mRNAs important for long-term synaptic plasticity in the hippocampus. In previous studies, we found that the oligomerization and activity of CPEB3 are controlled by small ubiquitin-like modifier (SUMO)ylation. In the basal state, CPEB3 is SUMOylated; it is soluble and acts as a repressor of translation. Following neuronal stimulation, CPEB3 is de-SUMOylated; it now forms oligomers that are converted into an active form that promotes the translation of target mRNAs. To better understand how CPEB3 regulates the translation of its mRNA targets, we have examined CPEB3 subcellular localization. We found that basal, repressive CPEB3 is localized to membraneless cytoplasmic processing bodies (P bodies), subcellular compartments that are enriched in translationally repressed mRNA. This basal state is affected by the SUMOylation state of CPEB3. After stimulation, CPEB3 is recruited into polysomes, thus promoting the translation of its target mRNAs. Interestingly, when we examined CPEB3 recombinant protein in vitro, we found that CPEB3 phase separates when SUMOylated and binds to a specific mRNA target. These findings suggest a model whereby SUMO regulates the distribution, oligomerization, and activity of oligomeric CPEB3, a critical player in the persistence of memory.