The Drosophila Toll pathway plays important roles in innate immune responses against Gram-positive bacteria and fungi. To identify previously uncharacterized components of this pathway, we performed comparative, ex vivo, genome-wide RNA interference screening. In four screens, we overexpressed the Toll adaptor protein dMyd88, the downstream kinase Pelle, or the nuclear factor κB (NF-κB) homolog Dif, or we knocked down Cactus, the Drosophila homolog of mammalian inhibitor of NF-κB. On the basis of these screens, we identified the E3 ubiquitin ligase Sherpa as being necessary for the activation of Toll signaling. A loss-of-function sherpa mutant fly exhibited compromised production of antimicrobial peptides and enhanced susceptibility to infection by Gram-positive bacteria. In cultured cells, Sherpa mediated ubiquitylation of dMyd88 and Sherpa itself, and Sherpa and Drosophila SUMO (small ubiquitin-like modifier) were required for the proper membrane localization of an adaptor complex containing dMyd88. These findings highlight a role for Sherpa in Drosophila host defense and suggest the SUMOylation-mediated regulation of dMyd88 functions in Toll innate immune signaling.