Methylation of arginine (Arg) and lysine residues in histones has been correlated with epigenetic forms of gene regulation. Although histone methyltransferases are known, enzymes that demethylate histones have not been identified. Here, we demonstrate that human peptidylarginine deiminase 4 (PAD4) regulates histone Arg methylation by converting methyl-Arg to citrulline and releasing methylamine. PAD4 targets multiple sites in histones H3 and H4, including those sites methylated by coactivators CARM1 (H3 Arg17) and PRMT1 (H4 Arg3). A decrease of histone Arg methylation, with a concomitant increase of citrullination, requires PAD4 activity in human HL-60 granulocytes. Moreover, PAD4 activity is linked with the transcriptional regulation of estrogen-responsive genes in MCF-7 cells. These data suggest that PAD4 mediates gene expression by regulating Arg methylation and citrullination in histones.