Small Heterodimer Partner (SHP) inhibits numerous transcription factors that are involved in diverse biological processes, including lipid and glucose metabolism. In response to increased hepatic bile acids, SHP gene expression is induced and the SHP protein is stabilized. We now show that the activity of SHP is also increased by posttranslational methylation at Arg-57 by protein arginine methyltransferase 5 (PRMT5). Adenovirus-mediated hepatic depletion of PRMT5 decreased SHP methylation and reversed the suppression of metabolic genes by SHP. Mutation of Arg-57 decreased SHP interaction with its known cofactors, Brm, mSin3A, and histone deacetylase 1 (HDAC1), but not with G9a, and decreased their recruitment to SHP target genes in mice. Hepatic overexpression of SHP inhibited metabolic target genes, decreased bile acid and hepatic triglyceride levels, and increased glucose tolerance. In contrast, mutation of Arg-57 selectively reversed the inhibition of SHP target genes and metabolic outcomes. The importance of Arg-57 methylation for the repression activity of SHP provides a molecular basis for the observation that a natural mutation of Arg-57 in humans is associated with the metabolic syndrome. Targeting posttranslational modifications of SHP may be an effective therapeutic strategy by controlling selected groups of genes to treat SHP-related human diseases, such as metabolic syndrome, cancer, and infertility.