Tudor domain-containing protein 3 (TDRD3) is a major methylarginine effector molecule that reads methyl-histone marks and facilitates gene transcription. However, the underlying mechanism by which TDRD3 functions as a transcriptional coactivator is unknown. We identified topoisomerase IIIB (TOP3B) as a component of the TDRD3 complex. TDRD3 serves as a molecular bridge between TOP3B and arginine-methylated histones. The TDRD3-TOP3B complex is recruited to the c-MYC gene promoter primarily by the H4R3me2a mark, and the complex promotes c-MYC gene expression. TOP3B relaxes negative supercoiled DNA and reduces transcription-generated R loops in vitro. TDRD3 knockdown in cells increases R loop formation at the c-MYC locus, and Tdrd3 null mice exhibit elevated R loop formation at this locus in B cells. Tdrd3 null mice show significantly increased c-Myc/Igh translocation, a process driven by R loop structures. By reducing negative supercoiling and resolving R loops, TOP3B promotes transcription, protects against DNA damage, and reduces the frequency of chromosomal translocations.