Mixed-lineage leukemia 4 (MLL4; also called MLL2 and ALR) enzymatically generates trimethylated histone H3 Lys 4 (H3K4me3), a hallmark of gene activation. However, how MLL4-deposited H3K4me3 interplays with other histone marks in epigenetic processes remains largely unknown. Here, we show that MLL4 plays an essential role in differentiating NT2/D1 stem cells by activating differentiation-specific genes. A tandem plant homeodomain (PHD(4-6)) of MLL4 recognizes unmethylated or asymmetrically dimethylated histone H4 Arg 3 (H4R3me0 or H4R3me2a) and is required for MLL4's nucleosomal methyltransferase activity and MLL4-mediated differentiation. Kabuki syndrome mutations in PHD(4-6) reduce PHD(4-6)'s binding ability and MLL4's catalytic activity. PHD(4-6)'s binding strength is inhibited by H4R3 symmetric dimethylation (H4R3me2s), a gene-repressive mark. The protein arginine methyltransferase 7 (PRMT7), but not PRMT5, represses MLL4 target genes by up-regulating H4R3me2s levels and antagonizes MLL4-mediated differentiation. Consistently, PRMT7 knockdown increases MLL4-catalyzed H3K4me3 levels. During differentiation, decreased H4R3me2s levels are associated with increased H3K4me3 levels at a cohort of genes, including many HOXA and HOXB genes. These findings indicate that the trans-tail inhibition of MLL4-generated H3K4me3 by PRMT7-regulated H4R3me2s may result from H4R3me2s's interference with PHD(4-6)'s binding activity and is a novel epigenetic mechanism that underlies opposing effects of MLL4 and PRMT7 on cellular differentiation.