Induction of transcription requires an ordered recruitment of coregulators and specific combinations of histone modifications at the promoter. Occurrence of histone H4 arginine (Arg) 3 methylation by protein arginine methyltransferase 1 (PRMT1) represents an early promoter event in ER (estrogen receptor)-regulated gene activation. However, its in vivo significance in ER signaling and the prerequisites for PRMT1 recruitment to promoters have not been established yet. We show here that endogenous PRMT1 is a crucial and non-redundant coactivator of ER-mediated pS2 gene induction in MCF7 cells. By investigating promoter requirements for PRMT1 recruitment we find that the patient SE translocation (SET) protein, which was reported to protect histone tails from acetylation, associates with the uninduced pS2 gene promoter and dissociates early upon estrogen treatment. Knockdown of SET or trichostatin A (TSA) treatment causes premature acetylation of H4 and abrogation of H4 Arg3 methylation at the pS2 gene promoter resulting in diminished transcriptional induction. Thus, SET prevents promoter acetylation and is a prerequisite for the initial acetylation-sensitive steps of pS2 gene activation, namely PRMT1 function. Similar to pS2 we identify lactoferrin as a PRMT1-dependent and TSA-sensitive ER target gene. In contrast, we find that the C3 gene, another ER target, is activated in a PRMT1-independent manner and that SET is involved in C3 gene repression. These findings establish the existence of PRMT1-dependent and -independent ER target genes and show that proteins guarding promoter hypoacetylation, like SET, execute a key function in the coactivation process by PRMT1.