Arginine methylation is a common post-translation modification found in many proteins. Protein-arginine methyltransferase I (PRMT1) contributes >90% of type I protein-arginine methyltransferase activity in cells and tissues. To expand our knowledge on the regulation and role of PRMT1 in cells, we used the yeast two-hybrid system to identify proteins that interact with PRMT1. One of the interacting proteins we cloned is interleukin enhancer-binding factor 3 (ILF3), also known as M phase phosphoprotein 4. ILF3 is closely related to nuclear factor 90 (NF90). Using an immunofluorescence analysis, we determined that ILF3 and PRMT1 co-localize in the nucleus. Moreover, PRMT1 and ILF3 co-precipitate in immunoprecipitation assays and can be isolated together in "pull-down" experiments using recombinant fusion proteins. ILF3 is a robust substrate for methylation by PRMT1 and can modulate PRMT1 activity in in vitro methylation assays. Deletion studies demonstrated that the COOH-terminal region of ILF3, which is rich in arginine, glycine, and serine, is responsible for the strong interaction between PRMT1 and ILF3 and is the site of ILF3 methylation by PRMT1. Although ILF3 and NF90 are highly similar, they differ in their carboxyl-terminal regions. Because of this difference, NF90 does not interact with PRMT1, is a much poorer substrate than ILF3 for PRMT1-dependent methylation, and does not modulate PRMT1 enzyme activity.