Low-rank matrix decomposition and kernel learning are two useful techniques in building advanced learning systems. Low-rank decomposition can greatly reduce the computational cost of manipulating large kernel matrices. However, existing approaches are mostly unsupervised and do not incorporate side information such as class labels, making the decomposition less effective for a specific learning task. On the other hand, kernel learning techniques aim at constructing kernel matrices whose structure is well aligned with the learning target, which improves the generalization performance of kernel methods. However, most kernel learning approaches are computationally very expensive. To obtain the advantages of both techniques and address their limitations, in this paper we propose a novel kernel low-rank decomposition formulation called the generalized Nyström method. Our approach inherits the linear time and space complexity via matrix decomposition, while at the same time fully exploits (partial) label information in computing task-dependent decomposition. In addition, the resultant low-rank factors can generalize to arbitrary new samples, rendering great flexibility in inductive learning scenarios. We further extend the algorithm to a multiple kernel learning setup. The experimental results on semi-supervised classification demonstrate the usefulness of the proposed method.