BACKGROUND: Myc is a well-known proto-oncogene, but its functions in normal tissue remain enigmatic. In adult epidermis, Myc stimulates exit from the stem cell compartment, decreasing cell adhesion and, by an unknown mechanism, triggering proliferation of transit-amplifying cells. RESULTS: We describe a novel direct target gene of Myc, Misu, that is expressed at low levels in normal epidermis but is upregulated on Myc activation. Misu encodes a previously uncharacterized RNA methyltransferase with high sequence homology to NSun2 and defines a new family of mammalian SUN-domain-containing proteins. The nucleolar localization of Misu is dependent on RNA polymerase III transcripts, and knockdown of Misu decreases nucleolar size. In G2 phase of the cell cycle, Misu is found in cytoplasmic vesicles, and it decorates the spindle in mitosis. Misu expression is highest in S phase, and RNAi constructs block Myc-induced keratinocyte proliferation and cell-cycle progression. Misu is expressed at low levels in normal tissues, but is highly induced in a range of tumors. Growth of human squamous-cell-carcinoma xenografts is decreased by Misu RNAi. CONCLUSIONS: Misu is a novel downstream Myc target that methylates RNA polymerase III transcripts. Misu mediates Myc-induced cell proliferation and growth and is a potential target for cancer therapies.