Methylation of Lys-9 of histone H3 has been associated with repression of transcription. G9a is a histone H3 Lys-9 methyltransferase localized in euchromatin and acts as a corepressor for specific transcription factors. Here we demonstrate that G9a also functions as a coactivator for nuclear receptors, cooperating synergistically with nuclear receptor coactivators glucocorticoid receptor interacting protein 1, coactivator-associated arginine methyltransferase 1 (CARM1), and p300 in transient transfection assays. This synergy depends strongly on the arginine-specific protein methyltransferase activity of CARM1 but does not absolutely require the enzymatic activity of G9a and is specific to CARM1 and G9a among various protein methyltransferases. Reduction of endogenous G9a diminished hormonal activation of an endogenous target gene by the androgen receptor, and G9a associated with regulatory regions of this same gene. G9a fused to Gal4 DNA binding domain can repress transcription in a lysine methyltransferase-dependent manner; however, the histone modifications associated with transcriptional activation can inhibit the methyltransferase activity of G9a. These findings suggest a link between histone arginine and lysine methylation and a mechanism for controlling whether G9a functions as a corepressor or coactivator.