The RNA exosome is an essential 3’ to 5’ processing exoribonuclease complex that mediates degradation, processing, and quality control of virtually all eukaryotic RNAs. The nucleolar RNA exosome, consisting of a 9-subunit core and a distributive 3ʹ to 5ʹ exonuclease EXOSC10, plays a critical role in processing and degrading nucleolar RNAs, including pre-ribosomal RNA (pre-rRNA). However, how the RNA exosome is regulated in the nucleolus is poorly understood. Here, we report that the nucleolar ubiquitin-specific protease USP36 is a novel regulator of the nucleolar RNA exosome. USP36 binds to the RNA exosome through direct interaction with EXOSC10. Interestingly, USP36 does not significantly regulate the levels of EXOSC10 and other exosome subunits. Instead, it mediates EXOSC10 SUMOylation at Lys (K) 583. Mutating K583 impaired the binding of EXOSC10 to pre-rRNAs and the K583R mutant failed to rescue the defects in rRNA processing and cell growth inhibition caused by knockdown of endogenous EXOSC10, indicating that EXOSC10 SUMOylation is critical for the exosome function in rRNA processing. Furthermore, USP36 itself is a rRNA-binding protein that associates pre-rRNA. These results suggest that USP36 acts as a novel SUMO ligase to mediate EXOSC10 SUMOylation critical for the RNA exosome function in rRNA processing and ribosome biogenesis.