Fusion protein AML1-ETO, resulting from t(8;21) translocation, is highly related to leukemia development. It has been reported that full-length AML1-ETO blocks AML1 function and requires additional mutagenic events to promote leukemia. We have previously shown that the expression of AE9a, a splice isoform of AML1-ETO, can rapidly cause leukemia in mice. To understand how AML1-ETO is involved in leukemia development, we took advantage of our AE9a leukemia model and sought to identify its interacting proteins from primary leukemic cells. Here, we report the discovery of a novel AE9a binding partner PRMT1 (protein arginine methyltransferase 1). PRMT1 not only interacts with but also weakly methylates arginine 142 of AE9a. Knockdown of PRMT1 affects expression of a specific group of AE9a-activated genes. We also show that AE9a recruits PRMT1 to promoters of AE9a-activated genes, resulting in enrichment of H4 arginine 3 methylation, H3 Lys9/14 acetylation, and transcription activation. More importantly, knockdown of PRMT1 suppresses the self-renewal capability of AE9a, suggesting a potential role of PRMT1 in regulating leukemia development.