Dimethylation of histone H3 Arg2 (H3R2me2) maintains transcriptional silencing by inhibiting Set1 mediated trimethylation of H3K4. Here we demonstrate that Arg2 is also monomethylated (H3R2me1) in yeast but that its functional characteristics are distinct from H3R2me2: (i) H3R2me1 does not inhibit histone H3 Lys4 (H3K4) methylation; (ii) it is present throughout the coding region of genes; and (iii) it correlates with active transcription. Collectively, these results indicate that different H3R2 methylation states have defined roles in gene expression.