SET domain protein lysine methyltransferases (PKMTs) regulate transcription and other cellular functions through site-specific methylation of histones and other substrates. PKMTs catalyze the formation of monomethylated, dimethylated, or trimethylated products, establishing an additional hierarchy with respect to methyllysine recognition in signaling. Biochemical studies of PKMTs have identified a conserved position within their active sites, the Phe/Tyr switch, that governs their respective product specificities. To elucidate the mechanism underlying this switch, we have characterized a Phe/Tyr switch mutant of the histone H4 Lys-20 (H4K20) methyltransferase SET8, which alters its specificity from a monomethyltransferase to a dimethyltransferase. The crystal structures of the SET8 Y334F mutant bound to histone H4 peptides bearing unmodified, monomethyl, and dimethyl Lys-20 reveal that the phenylalanine substitution attenuates hydrogen bonding to a structurally conserved water molecule adjacent to the Phe/Tyr switch, facilitating its dissociation. The additional space generated by the solvent's dissociation enables the monomethyllysyl side chain to adopt a conformation that is catalytically competent for dimethylation and furnishes sufficient volume to accommodate the dimethyl -ammonium product. Collectively, these results indicate that the Phe/Tyr switch regulates product specificity through altering the affinity of an active-site water molecule whose dissociation is required for lysine multiple methylation.enzyme mechanism ͉ histone methylation ͉ transcription ͉ chromatin ͉ enzyme kinetics L ysine methylation is a widespread covalent modification that occurs in histones and nonhistone proteins. Site-specific methylation of lysines in histones H3, H4, and H1b has been implicated in a myriad of functions, including transcriptional regulation, heterochromatin formation, and DNA damage response (1). Various effector proteins mediate these functions through sequence-specific recognition of lysine methyl marks. In addition, the lysine -amine group can be monomethylated, dimethylated, or trimethylated, imparting a further level of specificity in methyllysine signaling. The importance of this specificity has been emphasized by recent studies illustrating that specific methylation states are enriched in distinct regions of genes (2). Correlatively, certain methyllysine binding domains discriminate among different degrees of lysine methylation (3), underscoring the synergy between the site and degree of methylation in signaling.A key to deciphering the functions of lysine methylation is to understand the specificities of the enzymes that establish these marks. Structural studies of PKMTs belonging to the SET domain family have yielded insights into the mechanisms by which these enzymes recognize and methylate specific sites within their cognate substrates (4). Protein substrates generally bind in a -strand conformation, depositing the lysyl side chain in a channel that traverses the core of the catalytic domain and lin...