Prostate cancer evolution is driven by a combination of epigenetic and genetic alterations such as coordinated chromosomal rearrangements, termed chromoplexy. TMPRSS2-ERG gene fusions found in human prostate tumors are a hallmark of chromoplexy. TMPRSS2-ERG fusions have been linked to androgen signaling and depend on androgen receptor (AR)-coupled gene transcription. Here, we show that dimethylation of KDM1A at K114 (to form K114me2) by the histone methyltransferase EHMT2 is a key event controlling androgen-dependent gene transcription and TMPRSS2-ERG fusion. We identified CHD1 as a KDM1A K114me2 reader and characterized the KDM1A K114me2-CHD1 recognition mode by solving the cocrystal structure. Genome-wide analyses revealed chromatin colocalization of KDM1A K114me2, CHD1 and AR in prostate tumor cells. Together, our data link the assembly of methylated KDM1A and CHD1 with AR-dependent transcription and genomic translocations, thereby providing mechanistic insight into the formation of TMPRSS2-ERG gene fusions during prostate-tumor evolution.