The functional capacity of the transcriptional regulatory CCAAT/enhancer-binding protein-β (C/EBPβ) is governed by protein interactions and post-translational protein modifications. In a proteome-wide interaction screen, the histone-lysine N-methyltransferase, H3 lysine 9-specific 3 (G9a), was found to directly interact with the C/EBPβ transactivation domain (TAD). Binding between G9a and C/EBPβ was confirmed by glutathione S-transferase pulldown and co-immunoprecipitation. Metabolic labeling showed that C/EBPβ is post-translationally modified by methylation in vivo. A conserved lysine residue in the C/EBPβ TAD served as a substrate for G9a-mediated methylation. G9a, but not a methyltransferase-defective G9a mutant, abrogated the transactivation potential of wild type C/EBPβ. A C/EBPβ TAD mutant that contained a lysine-to-alanine exchange was resistant to G9a-mediated inhibition. Moreover, the same mutation conferred super-activation of a chromatin-embedded, endogenous C/EBPβ target gene. Our data identify C/EBPβ as a direct substrate of G9a-mediated post-translational modification that alters the functional properties of C/EBPβ during gene regulation.