In three spacetime dimensions, where no graviton propagates, pure gravity is known to be finite. It is natural to inquire whether finiteness survives the coupling with matter. Standard arguments ensure that there exists a subtraction scheme where no Lorentz-Chern-Simons term is generated by radiative corrections, but are not sufficiently powerful to ensure finiteness. Therefore, it is necessary to perform an explicit (two-loop) computation in a specific model. I consider quantum gravity coupled with Chem-Simons U(1) gauge theory and massless fermions and show that renormalization originates four-fermion divergent vertices at the second loop order. I conclude that quantum gravity coupled with matter, as it stands, is not finite in three spacetime dimensions. (C) 2004 Elsevier B.V. All rights reserved.