SET9 is a member of the SET domain-containing histone methyltransferase family that can specifically methylate histone 3 at lysine 4 position. Although nucleosomal histones are poor substrates for SET9, the active enzyme can stimulate activator-induced transcription. Here, we show that SET9 can monomethylate the TBP-associated factor TAF10 at a single lysine residue located at the loop 2 region within the putative histone-fold domain of the protein. Methylated TAF10 has an increased affinity for RNA polymerase II, pointing to a direct role of this modification in preinitiation complex formation. Reporter assays and studies on TAF10 null F9 cells expressing a methylation-deficient TAF10 mutant revealed that SET9-mediated methylation of TAF10 potentiates transcription of some but not all TAF10-dependent genes. This gene specificity correlated with SET9 recruitment. The promoter-specific effects of SET9-methylated TAF10 may have important implications regarding the biological function of SET domain-containing lysine methylases, whose primary targets have been presumed to be histones.