Histone methylation on lysine residues is believed to function primarily as docking sites to recruit specific proteins termed as histone code "readers" or "effectors." Each lysine residue can be mono-, di, and tri-methylated and different methylation states can have different effect on chromatin function. While an increasing number of proteins have been identified and characterized as specific effectors for methylated histones, very few of the proteins are known to recognize a particular state of methylation. In this study, we identified nardilysin (NRDc), a member of M16 family metalloendopeptidases, as a novel dimethyl-H3K4 (H3K4me2)-binding protein. Among three methylated states, NRDc binds preferentially H3K4me2 both in vitro and in vivo. Biochemical purification demonstrated that NRDc interacts with the NCoR/SMRT corepressor complex. We identified target genes repressed by NRDc through microarray. We showed that NRDc is physically associated with and recruits the NCoR complex to some of the repressed genes and this association correlates with binding of H3K4me2. Thus, our study has identified a novel H3K4me2-binding protein and revealed a role of NRDc in transcriptional regulation.