Peroxisome proliferator-activated receptor γ coactivator 1α (PGC-1α), a tissue-specific and inducible transcriptional coactivator for several nuclear receptors, plays a key role in energy metabolism. We report here that PGC-1α coactivator activity is potentiated by arginine methylation by protein arginine methyltransferase 1 (PRMT1), another nuclear receptor coactivator. Mutation of three substrate arginines in the C-terminal region of PGC-1α abolished the cooperative coactivator function of PGC-1α and PRMT1, and compromised the ability of PGC-1α to induce endogenous target genes. Finally, endogenous PRMT1 contributes to PGC-1α coactivator activity, and to the induction of genes important for mitochondrial biogenesis.