The oncogenic fusion protein AML1-ETO retains the ability of AML1 to interact with the enhancer core DNA sequences, but blocks AML1-dependent transcription. Previous studies have shown that post-translational modification of AML1-ETO may play a role in its regulation. Here we report that AML1-ETO-positive patients, with high histone lysine methyltransferase Enhancer of zeste homolog 1 (EZH1) expression, show a worse overall survival than those with lower EZH1 expression. EZH1 knockdown impairs survival and proliferation of AML1-ETO-expressing cells in vitro and in vivo. We find that EZH1 WD domain binds to the AML1-ETO NHR1 domain and methylates AML1-ETO at lysine 43 (Lys43). This requires the EZH1 SET domain, which augments AML1-ETO-dependent repression of tumor suppressor genes. Loss of Lys43 methylation by point mutation or domain deletion impairs AML1-ETO-repressive activity. These findings highlight the role of EZH1 in non-histone lysine methylation, indicating that cooperation between AML1-ETO and EZH1 and AML1-ETO site-specific lysine methylation promote AML1-ETO transcriptional repression in leukemia.