SMYD3 is a SET domain-containing protein with histone methyltransferase activity on histone H3-K4. Recent studies showed that SMYD3 is frequently overexpressed in different types of cancer cells, but how SMYD3 regulates the development and progression of these malignancies remains unknown. Here, we report the previously unrecognized role of SMYD3 in estrogen receptor (ER)-mediated transcription via its histone methyltransferase activity. We demonstrate that SMYD3 functions as a coactivator of ERalpha and potentiates ERalpha activity in response to ligand. SMYD3 directly interacts with the ligand binding domain of ER and is recruited to the proximal promoter regions of ER target genes upon gene induction. Importantly, our chromatin immunoprecipitation analyses provide compelling evidence that SMYD3 is responsible for the accumulation of di- and trimethylation of H3-K4 at the induced ER target genes. Furthermore, RNA interference-directed down-regulation of SMYD3 reveals that SMYD3 is required for ER-regulated gene transcription in estrogen signaling pathway. Thus, our results identify SMYD3 as a new coactivator for ER-mediated transcription, providing a possible link between SMYD3 overexpression and breast cancer.