We have identified the major enzymatic activity responsible for the S-adenosyl-L-methionine-dependent methylation of arginine residues (EC 2.1.1.23) in proteins of the yeast Saccharomyces cerevisiae. The RMT1 (protein-arginine methyltransferase), formerly ODP1, gene product encodes a 348-residue polypeptide of 39.8 kDa that catalyzes both the NG-mono- and NG, NG-asymmetric dimethylation of arginine residues in a variety of endogenous yeast polypeptides. A yeast strain in which the chromosomal RMT1 gene was disrupted is viable, but the level of NG,NG-[3H]dimethylarginine residues detected in intact cells incubated with S-adenosyl-L-[methyl-3H]methionine is reduced to less than 15% of the levels found in the parent strain, while the NG-[3H]monomethylarginine content is reduced to less than 30%. We show that soluble extract from parent cell, but not from mutant rmt1 cells, catalyzes the in vitro methylation of endogenous polypeptides of 55, 41, 38, 34, and 30 kDa. The hypomethylated form of these five polypeptides, as well as that of several others, can be mono- and asymmetrically dimethylated by incubating the mutant rmt1 extract with a purified, bacterially produced, glutathione S-transferase-RMT1 fusion protein and S-adenosyl-L-[methyl-3H]methionine. This glutathione S-transferase-RMT1 fusion protein is also able to methylate a number of mammalian polypeptides including histones, recombinant heterogeneous ribonucleoprotein A1, cytochrome c, and myoglobin, but cannot methylate myelin basic protein. RMT1 appears to be a yeast homolog of a recently characterized mammalian protein-arginine methyltransferase whose activity may be modulated by mitotic stimulation of cells.