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Abstract Background Human tauopathies including Alzheimer’s disease (AD) are characterized by alterations in the post-translational modification (PTM) pattern of Tau, which parallel the formation of insoluble Tau aggregates, neuronal dysfunction and degeneration. While PTMs on aggregated Tau have been studied in detail, much less is known about the modification patterns of soluble Tau. Furthermore, PTMs other than phosphorylation have only come into focus recently and are still understudied. Soluble Tau species are likely responsible for the spreading of pathology during disease progression and are currently being investigated as targets for immunotherapies. A better understanding of their biochemical properties is thus of high importance. Methods We used a mass spectrometry approach to characterize Tau PTMs on a detergent-soluble fraction of human AD and control brain tissue, which led to the discovery of novel lysine methylation events. We developed specific antibodies against Tau methylated at these sites and biochemically characterized methylated Tau species in extracts from human brain, the rTg4510 mouse model and in hiPSC-derived neurons. Results Our study demonstrates that methylated Tau levels increase with Tau pathology stage in human AD samples as well as in a mouse model of Tauopathy. Methylated Tau is enriched in soluble brain extracts and is not associated with hyperphosphorylated, high molecular weight Tau species. We also show that in hiPSC-derived neurons and mouse brain, methylated Tau preferentially localizes to the cell soma and nuclear fractions and is absent from neurites. Knock down and inhibitor studies supported by proteomics data led to the identification of SETD7 as a novel lysine methyltransferase for Tau. SETD7 specifically methylates Tau at K132, an event that facilitates subsequent methylation at K130. Conclusions Our findings indicate that methylated Tau has a specific somatic and nuclear localization, suggesting that the methylation of soluble Tau species may provide a signal for their translocation to different subcellular compartments. Since the mislocalization and depletion of Tau from axons is associated with tauopathies, our findings may shed light onto this disease-associated phenomenon.