Significance Protein lysine methyl transferases and demethylases, previously identified for histone modification, now are known to modify several nonhistone proteins as well. Their deregulation leads to the development and progression of various diseases, including cancer. Thus these enzymes now stand out as attractive therapeutic targets. We present a detailed study of STAT3 posttranslational modification at K49 by the histone methyl transferase, enhancer of zeste homolog 2 (EZH2). Dimethylation of K49 modulates IL-6–responsive transcription, revealing a previously unrecognized important functional modification of STAT3 activity. Because STAT3 is a major oncogene, and EZH2 function is modified in many cancers, this functional connection between the two raises the possibility that modulation of EZH2 activity might be useful in inhibiting the oncogenic activity of STAT3. Several transcription factors, including p53, NF-κB, and STAT3, are modified by the same enzymes that also modify histones, with important functional consequences. We have identified a previously unrecognized dimethylation of K49 of STAT3 that is crucial for the expression of many IL-6–dependent genes, catalyzed by the histone-modifying enzyme enhancer of zeste homolog 2 (EZH2). Loss of EZH2 is protumorigenic in leukemias, but its overexpression is protumorigenic in solid cancers. Connecting EZH2 to a functionally important methylation of STAT3, which is constitutively activated in many tumors, may help reveal the basis of the opposing roles of EZH2 in liquid and solid tumors and also may identify novel therapeutic opportunities.