The heterogeneous nuclear ribonucleoprotein Npl3p of budding yeast is a substrate of arginine methyltransferase Hmt1p, but the role of Hmt1p in regulating Npl3p's functions in transcription antitermination and elongation were unknown. We found that mutants lacking Hmt1p methyltransferase activity exhibit reduced recruitment of Npl3p, but elevated recruitment of a component of mRNA cleavage/termination factor CFI, to the activated GAL10-GAL7 locus. Consistent with this, hmt1 mutants displayed increased termination at the defective gal10-Delta56 terminator. Remarkably, hmt1Delta cells also exhibit diminished recruitment of elongation factor Tho2p and a reduced rate of transcription elongation in vivo. Importantly, the defects in Npl3p and Tho2p recruitment, antitermination and elongation in hmt1Delta cells all were mitigated by substitutions in Npl3p RGG repeats that functionally mimic arginine methylation by Hmt1p. Thus, Hmt1p promotes elongation and suppresses termination at cryptic terminators by methylating RGG repeats in Npl3p. As Hmt1p stimulates dissociation of Tho2p from an Npl3p-mRNP complex, it could act to recycle these elongation and antitermination factors back to sites of ongoing transcription.