Many actin-binding proteins have been shown to possess multiple activities to regulate filament dynamics. Tropomodulins (Tmod1-4) are a conserved family of actin filament pointed end-capping proteins. Our previous work has demonstrated that Tmod3 binds to monomeric actin in addition to capping pointed ends. Here, we show a novel actin-nucleating activity in mammalian Tmods. Comparison of Tmod isoforms revealed that Tmod1-3 but not Tmod4 nucleate actin filament assembly. All Tmods bind to monomeric actin, and Tmod3 forms a 1:1 complex with actin. By truncation and mutagenesis studies, we demonstrated that the second α-helix in the N-terminal domain of Tmod3 is essential for actin monomer binding. Chemical cross-linking and LC-MS/MS further indicated that residues in this second α-helix interact with actin subdomain 2, whereas Tmod3 N-terminal domain peptides distal to this α-helix interact with actin subdomain 1. Mutagenesis of Leu-73 to Asp, which disrupts the second α-helix of Tmod3, decreases both its actin monomer-binding and -nucleating activities. On the other hand, point mutations of residues in the C-terminal leucine-rich repeat domain of Tmod3 (Lys-317 in the fifth leucine-rich repeat β-sheet and Lys-344 or Arg-345/Arg-346 in the C-terminal α6-helix) significantly reduced pointed end-capping and nucleation without altering actin monomer binding. Taken together, our data indicate that Tmod3 binds actin monomers over an extended interface and that nucleating activity depends on actin monomer binding and pointed end-capping activities, contributed by N- and C-terminal domains of Tmod3, respectively. Tmod3 nucleation of actin assembly may regulate the cytoskeleton in dynamic cellular contexts.