The MLL (mixed-lineage leukemia) proto-oncogene encodes a histone methyltransferase that creates the methylated histone H3K4 epigenetic marks, commonly associated with actively transcribed genes. In addition to its canonical histone methyltransferase SET domain, the MLL protein contains three plant homeodomain (PHD) fingers that are well conserved between species but whose potential roles and requirements for MLL function are unknown. Here, we demonstrate that the third PHD domain of MLL (PHD3) binds histone H3 trimethylated at lysine 4 (H3K4me3) with high affinity and specificity and H3K4me2 with 8-fold lower affinity. Biochemical and structural analyses using NMR and fluorescence spectroscopy identified key amino acids essential for the interaction with H3K4me3. Site-directed mutations of the residues involved in recognition of H3K4me3 compromised in vitro H3K4me3 binding but not in vivo localization of full-length MLL to chromatin sites in target promoters of MEIS1 and HOXA genes. Whereas intact PHD3 finger was necessary for MLL occupancy at these promoters, H3K4me3 binding was critical for MLL transcriptional activity. These results demonstrate that MLL occupancy and target gene activation can be functionally separated. Furthermore, these findings reveal that MLL not only "writes" the H3K4me3 mark but also binds the mark, and this binding is required for the transcriptional maintenance functions of MLL.