Sox2 is a key component of the transcription factor network that maintains the pluripotent state of embryonic stem cells (ESCs). Sox2 is regulated by multiple post-translational modifications, including ubiquitination, sumoylation, acetylation and phosphorylation. Here we report that Sox2 is in association with and methylated by coactivator-associated arginine methyltransferase 1 (CARM1), a protein arginine methyltransferase that plays a pivotal role in ESCs. We found that CARM1 facilitates Sox2-mediated transactivation and directly methylates Sox2 at arginine 113. This methylation event enhances Sox2 self-association. Furthermore, the physiological retention of Sox2 on chromatin restricts the Sox2 methylation level. Our study reveals the direct regulation of Sox2 by CARM1 that sheds lights on how arginine methylation signals are integrated into the pluripotent transcription factor network.