The functional capacity of the transcriptional regulatory CCAAT/enhancer-binding protein-beta (C/EBPbeta) is governed by protein interactions and post-translational protein modifications. In a proteome-wide interaction screen, the histone-lysine N-methyltransferase, H3 lysine 9-specific 3 (G9a), was found to directly interact with the C/EBPbeta transactivation domain (TAD). Binding between G9a and C/EBPbeta was confirmed by glutathione S-transferase pulldown and co-immunoprecipitation. Metabolic labeling showed that C/EBPbeta is post-translationally modified by methylation in vivo. A conserved lysine residue in the C/EBPbeta TAD served as a substrate for G9a-mediated methylation. G9a, but not a methyltransferase-defective G9a mutant, abrogated the transactivation potential of wild type C/EBPbeta. A C/EBPbeta TAD mutant that contained a lysine-to-alanine exchange was resistant to G9a-mediated inhibition. Moreover, the same mutation conferred super-activation of a chromatin-embedded, endogenous C/EBPbeta target gene. Our data identify C/EBPbeta as a direct substrate of G9a-mediated post-translational modification that alters the functional properties of C/EBPbeta during gene regulation.