Histone lysine methylation, as one of the most important factors in transcriptional regulation, is associated with a various physiological conditions. Using a bioinformatics search, we identified and subsequently cloned mouse SET domain containing 3 (SETD3) with SET (Su(var)3-9, Enhancer-of-zeste and Trithorax) and Rubis-subs-bind domains. SETD3 is a novel histone H3K4 and H3K36 methyltransferase with transcriptional activation activity. SETD3 is expressed abundantly in muscular tissues and, when overexpressed, activates transcription of muscle-related genes, myogenin, muscle creatine kinase (MCK), and myogenic factor 6 (Myf6), thereby inducing muscle cell differentiation. Conversely, knockdown of SETD3 by shRNA significantly retards muscle cell differentiation. In this study, SETD3 was recruited to the myogenin gene promoter along with MyoD where it activated transcription. Together, these data indicate that SETD3 is a H3K4/K36 methyltransferase and plays an important role in the transcriptional regulation of muscle cell differentiation.