Protein arginine methylation is emerging as a pivotal posttranslational modification involved in regulating various cellular processes; however, its role in erythropoiesis is still elusive. Erythropoiesis generates circulating red blood cells which are vital for body activity. Deficiency in erythroid differentiation causes anemia which compromises the quality of life. Despite extensive studies, the molecular events regulating erythropoiesis are not fully understood. This study showed that the increase in protein arginine methyltransferase 1 (PRMT1) levels, via transfection or protein transduction, significantly promoted erythroid differentiation in the bipotent human K562 cell line as well as in human primary hematopoietic progenitor CD34(+) cells. PRMT1 expression enhanced the production of hemoglobin and the erythroid surface marker glycophorin A, and also up-regulated several key transcription factors, GATA1, NF-E2 and EKLF, which are critical for lineage-specific differentiation. The shRNA-mediated knockdown of PRMT1 suppressed erythroid differentiation. The methyltransferase activity-deficient PRMT1G80R mutant failed to stimulate differentiation, indicating the requirement of arginine methylation of target proteins. Our results further showed that a specific isoform of p38 MAPK, p38α, promoted erythroid differentiation, whereas p38β did not play a role. The stimulation of erythroid differentiation by PRMT1 was diminished in p38α- but not p38β-knockdown cells. PRMT1 appeared to act upstream of p38α, since expression of p38α still promoted erythroid differentiation in PRMT1-knockdown cells, and expression of PRMT1 enhanced the activation of p38 MAPK. Importantly, we showed for the first time that PRMT1 was associated with p38α in cells by co-immunoprecipitation and that PRMT1 directly methylated p38α in in vitro methylation assays. Taken together, our findings unveil a link between PRMT1 and p38α in regulating the erythroid differentiation program and provide evidence suggesting a novel regulatory mechanism for p38α through arginine methylation.