To expand our understanding of the role of Jak2 in cellular signaling, we used the yeast two-hybrid system to identify Jak2-interacting proteins. One of the clones identified represents a human homologue of the Schizosaccaromyces pombe Shk1 kinase-binding protein 1, Skb1, and the protein encoded by the Saccharomyces cerevisiae HSL7 (histone synthetic lethal 7) gene. Since no functional motifs or biochemical activities for this protein or its homologues had been reported, we sought to determine a biochemical function for this human protein. We demonstrate that this protein is a protein methyltransferase. This protein, designated JBP1 (Jak-binding protein 1), and its homologues contain motifs conserved among protein methyltransferases. JBP1 can be cross-linked to radiolabeled S-adenosylmethionine (AdoMet) and methylates histones (H2A and H4) and myelin basic protein. Mutants containing substitutions within a conserved region likely to be involved in AdoMet binding exhibit little or no activity. We mapped the JBP1 gene to chromosome 14q11.2-21. In addition, JBP1 co-immunoprecipitates with several other proteins, which serve as methyl group acceptors and which may represent physiological targets of this methyltransferase. Messenger RNA for JBP1 is widely expressed in human tissues. We have also identified and sequenced a homologue of JBP1 in Drosophila melanogaster. This report provides a clue to the biochemical function for this conserved protein and suggests that protein methyltransferases may have a role in cellular signaling.