Estrogen receptor alpha (ER) is a ligand-dependent transcription factor. Upon binding estrogen, ER recruits coactivator complexes with histone acetyltransferase or methyltransferase activities to activate downstream target genes. In addition to histones, coactivators can modify ER itself and other proteins in the transactivation complex. Here, we show that ER is directly methylated at lysine 302 (K302) by the SET7 methyltransferase. SET7-mediated methylation stabilizes ER and is necessary for the efficient recruitment of ER to its target genes and for their transactivation. The SET7-ER complex structure reveals the molecular basis for ER peptide recognition and predicts that modifications or mutations of nearby residues would affect K302 methylation. Indeed, a breast cancer-associated mutation at K303 (K303R) alters methylation at K302 in vitro and in vivo. These findings raise the possibility that generation, recognition, and removal of modifications within the ER hinge region generate "ER modification cassettes" that yield distinct patterns for signaling downstream events.