Retinoids are morphogens and have been implicated in cell fate commitment of embryonic stem cells (ESCs) to neurons. Their effects are mediated by RAR and RXR nuclear receptors. However, transcriptional cofactors required for cell and gene-specific retinoid signaling are not known. Here we show that protein arginine methyl transferase (PRMT) 1 and 8 have key roles in determining retinoid regulated gene expression and cellular specification in a multistage neuronal differentiation model of murine ESCs. PRMT1 acts as a selective modulator, providing the cells with a mechanism to reduce the potency of retinoid signals on regulatory "hotspots." PRMT8 is a retinoid receptor target gene itself and acts as a cell type specific transcriptional coactivator of retinoid signaling at later stages of differentiation. Lack of either of them leads to reduced nuclear arginine methylation, dysregulated neuronal gene expression, and altered neuronal activity. Importantly, depletion of PRMT8 results in altered expression of a distinct set of genes, including markers of gliomagenesis. PRMT8 is almost entirely absent in human glioblastoma tissues. We propose that PRMT1 and PRMT8 serve as a rheostat of retinoid signaling to determine neuronal cell specification in a context-dependent manner and might also be relevant in the development of human brain malignancy. STEM CELLS 2015;33:726-741