Mutations and translocations within the COMPASS (complex of proteins associated with Set1) family of histone lysine methyltransferases are associated with a large number of human diseases, including cancer. Here we report that SET1B/COMPASS, which is essential for cell survival, surprisingly has a cytoplasmic variant. SET1B, but not its SET domain, is critical for maintaining cell viability, indicating a novel catalytic-independent role of SET1B/COMPASS. Loss of SET1B or its unique cytoplasmic-interacting protein, BOD1, leads to up-regulation of expression of numerous genes modulating fatty acid metabolism, including ADIPOR1 (adiponectin receptor 1), COX7C, SDC4, and COQ7. Our detailed molecular studies identify ADIPOR1 signaling, which is inactivated in both obesity and human cancers, as a key target of SET1B/COMPASS. Collectively, our study reveals a cytoplasmic function for a member of the COMPASS family, which could be harnessed for therapeutic regulation of signaling in human diseases, including cancer.