The ets-related gene erg encodes a transcription factor that is implicated in the control of cell growth and differentiation. To identify interacting partners of ERG, we screened a yeast two-hybrid cDNA library constructed from mouse hematopoietic cells using the N-terminal region of ERG as a bait. We isolated a 4.6 kb full-length mouse cDNA encoding a 1307-amino acid protein migrating as a 180 kD band, which was termed ESET (ERG-associated protein with SET domain). ESET is 92% identical to the human protein SETDB1 (SET domain, bifurcated 1). The interaction between ESET and ERG was supported by in vitro pull-down using glutathione S-transferase (GST) fusion protein, by transfection and co-immunoprecipitation experiments, and by association of endogenous SETDB1 with ERG. Since ESET possesses evolutionarily conserved SET, preSET, and postSET domains implicated in histone methylation, we tested the ability of ESET to methylate core histones. The results of these studies demonstrated that ESET is a histone H3-specific methyltransferase, and that mutations within ESET abolished its methyltransferase activity. Together, these findings raise the possibility that transcription factor ERG may participate in transcriptional regulation through ESET-mediated histone methylation.