BACKGROUND: Dynamic changes in the modification pattern of histones, such as acetylation, phosphorylation, methylation, and ubiquitination, are thought to provide a code for the correct regulation of gene expression mostly by affecting chromatin structure and interactions of non-histone regulatory factors with chromatin. Recent studies have suggested the existence of an interplay between histone modifications during transcription. The CBP/p300 acetylase and the CARM1 methyltransferase can positively regulate the expression of estrogen-responsive genes, but the existence of a crosstalk between lysine acetylation and arginine methylation on chromatin has not yet been established in vivo. RESULTS: By following the in vivo pattern of modifications on histone H3, following estrogen stimulation of the pS2 promoter, we show that arginine methylation follows prior acetylation of H3. Within 15 min after estrogen stimulation, CBP is bound to chromatin, and acetylation of K18 takes place. Following these events, K23 is acetylated, CARM1 associates with chromatin, and methylation at R17 takes place. Exogenous expression of CBP is sufficient to drive the association of CARM1 with chromatin and methylation of R17 in vivo, whereas an acetylase-deficient CBP mutant is unable to induce these events. A mechanism for the observed cooperation between acetylation and arginine methylation comes from the finding that acetylation at K18 and K23, but not K14, tethers recombinant CARM1 to the H3 tail and allows it to act as a more efficient arginine methyltransferase. CONCLUSION: These results reveal an ordered and interdependent deposition of acetylation and arginine methylation during estrogen-regulated transcription and provide support for a combinatorial role of histone modifications in gene expression.