The N-terminal tails of core histones are subjected to multiple covalent modifications, including acetylation, methylation, and phosphorylation. Similar to acetylation, histone methylation has emerged as an important player in regulating chromatin dynamics and gene activity. Histone methylation occurs on arginine and lysine residues and is catalyzed by two families of proteins, the protein arginine methyltransferase family and the SET-domain-containing methyltransferase family. Here, we report that lysine 79 (K79) of H3, located in the globular domain, can be methylated. K79 methylation occurs in a variety of organisms ranging from yeast to human. In budding yeast, K79 methylation is mediated by the silencing protein DOT1. Consistent with conservation of K79 methylation, DOT1 homologs can be found in a variety of eukaryotic organisms. We identified a human DOT1-like (DOT1L) protein and demonstrated that this protein possesses intrinsic H3-K79-specific histone methyltransferase (HMTase) activity in vitro and in vivo. Furthermore, we found that K79 methylation level is regulated throughout the cell cycle. Thus, our studies reveal a new methylation site and define a novel family of histone lysine methyltransferase.