Histone methylation is crucial for transcriptional regulation and chromatin remodeling. It has been suggested that the SET domain containing protein RE-IIBP (interleukin-5 [IL-5] response element II binding protein) may perform a function in the carcinogenesis of certain tumor types, including myeloma. However, the pathogenic role of RE-IIBP in these diseases remains to be clearly elucidated. In this study, we have conducted an investigation into the relationship between the histone-methylating activity of RE-IIBP and transcriptional regulation. Here, we report that RE-IIBP is up-regulated in the blood cells of leukemia patients, and we characterized the histone H3 lysine 27 (H3-K27) methyltransferase activity of RE-IIBP. Point mutant analysis revealed that SET domain cysteine 483 and arginine 477 are critical residues for the histone methyltransferase (HMTase) activity of RE-IIBP. RE-IIBP also represses basal transcription via histone deacetylase (HDAC) recruitment, which may be mediated by H3-K27 methylation. In the chromatin immunoprecipitation assays, we showed that RE-IIBP overexpression induces histone H3-K27 methylation, HDAC recruitment, and histone H3 hypoacetylation on the IL-5 promoter and represses expression. Conversely, short hairpin RNA-mediated knockdown of RE-IIBP reduces histone H3-K27 methylation and HDAC occupancy around the IL-5 promoter. These data illustrate the important regulatory role of RE-IIBP in transcriptional regulation, thereby pointing to the important role of HMTase activity in carcinogenesis.