We demonstrate that RING finger protein MSL2 in the MOF-MSL complex is a histone ubiquitin E3 ligase. MSL2, together with MSL1, has robust histone ubiquitylation activity that mainly targets nucleosomal H2B on lysine 34 (H2B K34ub), a site within a conserved basic patch on H2B tail. H2B K34ub by MSL1/2 directly regulates H3 K4 and K79 methylation through trans-tail crosstalk both in vitro and in cells. The significance of MSL1/2-mediated histone H2B ubiquitylation is underscored by the facts that MSL1/2 activity is important for transcription activation at HOXA9 and MEIS1 loci and that this activity is evolutionarily conserved in the Drosophila dosage compensation complex. Altogether, these results indicate that the MOF-MSL complex possesses two distinct chromatin-modifying activities (i.e., H4 K16 acetylation and H2B K34 ubiquitylation) through MOF and MSL2 subunits. They also shed light on how an intricate network of chromatin-modifying enzymes functions coordinately in gene activation.