The carboxy-terminal domain (CTD) of RNA polymerase II (RNAPII) in mammals undergoes extensive posttranslational modification, which is essential for transcriptional initiation and elongation. Here, we show that the CTD of RNAPII is methylated at a single arginine (R1810) by the coactivator-associated arginine methyltransferase 1 (CARM1). Although methylation at R1810 is present on the hyperphosphorylated form of RNAPII in vivo, Ser2 or Ser5 phosphorylation inhibits CARM1 activity toward this site in vitro, suggesting that methylation occurs before transcription initiation. Mutation of R1810 results in the misexpression of a variety of small nuclear RNAs and small nucleolar RNAs, an effect that is also observed in Carm1−/− mouse embryo fibroblasts. These results demonstrate that CTD methylation facilitates the expression of select RNAs, perhaps serving to discriminate the RNAPII-associated machinery recruited to distinct gene types.