The transcriptional coactivator p/CIP(SRC-3/AIB1/ACTR/RAC3) binds liganded nuclear hormone receptors and facilitates transcription by directly recruiting accessory factors such as acetyltransferase CBP/p300 and the coactivator arginine methyltransferase CARM1. In the present study, we have established that recombinant p/CIP (p300/CBP interacting protein) is robustly methylated by CARM1 in vitro but not by other protein arginine methyltransferase family members. Metabolic labeling of MCF-7 breast cancer cells with S-adenosyl-L-[methyl-(3)H]methionine and immunoblotting using dimethyl arginine-specific antibodies demonstrated that p/CIP is specifically methylated in intact cells. In addition, methylation of full-length p/CIP is not supported by extracts derived from CARM1(-/-) mouse embryo fibroblasts, indicating that CARM1 is required for p/CIP methylation. Using mass spectrometry, we have identified three CARM1-dependent methylation sites located in a glutamine-rich region within the carboxy terminus of p/CIP which are conserved among all steroid receptor coactivator proteins. These results were confirmed by in vitro methylation of p/CIP using carboxy-terminal truncation mutants and synthetic peptides as substrates for CARM1. Analysis of methylation site mutants revealed that arginine methylation causes an increase in full-length p/CIP turnover as a result of enhanced degradation. Additionally, methylation negatively impacts transcription via a second mechanism by impairing the ability of p/CIP to associate with CBP. Collectively, our data highlight coactivator methylation as an important regulatory mechanism in hormonal signaling.