Replication of a damaged DNA template can threaten the integrity of the genome, requiring the use of various mechanisms to tolerate DNA lesions. The Smc5/6 complex, together with the Nse2/Mms21 SUMO ligase, plays essential roles in genome stability through undefined tasks at damaged replication forks. Various subunits within the Smc5/6 complex are substrates of Nse2, but we currently do not know the role of these modifications. Here we show that sumoylation of Smc5 is targeted to its coiled-coil domain, is upregulated by replication fork damage, and participates in bypass of DNA lesions. smc5-KR mutant cells display defects in formation of sister chromatid junctions and higher translesion synthesis. Also, we provide evidence indicating that Smc5 sumoylation modulates Mph1-dependent fork regression, acting synergistically with other pathways to promote chromosome disjunction. We propose that sumoylation of Smc5 enhances physical remodeling of damaged forks, avoiding the use of a more mutagenic tolerance pathway. Display omitted •Smc5-SUMO is a specific read-out for damaged replication forks•SUMO preferentially targets lysines in the coiled-coil domain of Smc5•smc5-KR is epistatic to MPH1, upregulating TLS and reducing strand exchange•Defects in Smc5 sumoylation are normally backed up by the Mms4-Mus81 nuclease Zapatka et al. show that sumoylation of Smc5 helps cells tolerate DNA lesions at damaged replication forks in an error-free mode. Using unsumoylatable smc5-KR mutants, they show that this modification operates through Mph1 in fork regression, working in parallel with several nucleases and helicases to promote chromosome segregation.