Trimethylation of lysine residue K4 of histone H3 (H3K4me3) strongly correlates with active promoters for RNA polymerase II-transcribed genes. Several reader proteins, including the basal transcription factor TFIID, for this nucleosomal mark have been identified. Its TAF3 subunit specifically binds the H3K4me3 mark via its conserved plant homeodomain (PHD) finger. Here, we report the solution structure of the TAF3-PHD finger and its complex with an H3K4me3 peptide. Using a combination of NMR, mutagenesis, and affinity measurements, we reveal the structural basis of binding affinity, methylation-state specificity, and crosstalk with asymmetric dimethylation of R2. A unique local structure rearrangement in the K4me3-binding pocket of TAF3 due to a conserved sequence insertion underscores the requirement for cation-pi interactions by two aromatic residues. Interference by asymmetric dimethylation of arginine 2 suggests that a H3R2/K4 "methyl-methyl" switch in the histone code dynamically regulates TFIID-promoter association.