DAL-1 (differentially expressed in adenocarcinoma of the lung)/4.1B is a tumor suppressor gene on human chromosome 18p11.3 whose expression is lost in >50% of primary non-small-cell lung carcinomas. Based on sequence similarity, DAL-1/4.1B has been assigned to the Protein 4.1 superfamily whose members interact with plasma membrane proteins through their N-terminal FERM (4.1/Ezrin/Radixin/Moesin) domain, and cytoskeletal components via their C-terminal SAB (spectrin-actin binding) region. Using the DAL-1/4.1B FERM domain as bait for yeast two-hybrid interaction cloning, we identified protein arginine N-methyltransferase 3 (PRMT3) as a specific DAL-1/4.1B-interacting protein. PRMT3 catalyses the post-translational transfer of methyl groups from S-adenosyl-L-methionine to arginine residues of proteins. Coimmunoprecipitation experiments using lung and breast cancer cell lines confirmed this interaction in mammalian cells in vivo. In vitro binding assays demonstrated that this was an interaction occurring via the C-terminal catalytic core domain of PRMT3. DAL-1/4.1B was determined not to be a substrate for PRMT3-mediated methylation but its presence inhibits the in vitro methylation of a glycine-rich and arginine-rich methyl-accepting protein, GST (glutathione-S-transferase-GAR (glycine- and arginine-rich), which contains 14 'RGG' consensus methylation sites. In addition, induced expression of DAL-1/4.1B in MCF-7 breast cancer cells showed that the DAL-1/4.1B protein significantly inhibits PRMT3 methylation of cellular substrates. These findings suggest that modulation of post-translational methylation may be an important mechanism through which DAL-1/4.1B affects tumor cell growth.