Modification of proteins by methylation has emerged as a key regulatory mechanism in many cellular processes, including gene control. Eighty to ninety percent of the arginine methylation in the cell is performed by the protein arginine methyl transferase PRMT1. ILF3, a protein involved in gene regulation at several levels, has been shown to be a substrate and regulator of PRMT1 in mammals. Here we show that the Xenopus orthologue of ILF3 (Xilf3) is methylated in vivo, and, at least in vitro, this methylation is carried out by Xprmt1b. The in vitro methylation of Xilf3 inhibits its ability to bind to DNA while leaving RNA binding activity unaltered. Consistent with these activities having a role in vivo, the DNA binding activity of the Xilf3-containing CBTF complex and the transcription of its target gene, Xgata2, are both decreased by overexpression of Xprmt1b in embryos. However, in contrast to other RNA binding proteins, a changing degree of methylation does not alter the subcellular localization of Xilf3. Several other proteins involved in gene regulation can bind both RNA and DNA; these data demonstrate a mechanism by which such binding activities may be controlled independently.