Specific sites of histone tail methylation are associated with transcriptional activity at gene loci. These methyl marks are interpreted by effector molecules, which harbor protein domains that bind the methylated motifs and facilitate either active or inactive states of transcription. CARM1 and PRMT1 are transcriptional coactivators that deposit H3R17me2a and H4R3me2a marks, respectively. We used a protein domain microarray approach to identify the Tudor domain-containing protein TDRD3 as a "reader" of these marks. Importantly, TDRD3 itself is a transcriptional coactivator. This coactivator activity requires an intact Tudor domain. TDRD3 is recruited to an estrogen-responsive element in a CARM1-dependent manner. Furthermore, ChIP-seq analysis of TDRD3 reveals that it is predominantly localized to transcriptional start sites. Thus, TDRD3 is an effector molecule that promotes transcription by binding methylarginine marks on histone tails.