PRMT1 is the predominant type I protein arginine methyltransferase in mammals and highly conserved among all eukaryotes. It is essential for early postimplantation development in mouse. Here we describe the crystal structure of rat PRMT1 in complex with the reaction product AdoHcy and a 19 residue substrate peptide containing three arginines. The results reveal a two-domain structure-an AdoMet binding domain and a barrel-like domain-with the active site pocket located between the two domains. Mutagenesis studies confirmed that two active site glutamates are essential for enzymatic activity, and that dimerization of PRMT1 is essential for AdoMet binding. Three peptide binding channels are identified: two are between the two domains, and the third is on the surface perpendicular to the strands forming the beta barrel.