Heterochromatin protein 1 (HP1) is a small non-histone chromosomal protein known as a dominant suppressor of position-effect variegation and a major component of heterochromatin. Posttranslationally modified HP1, through interaction with protein partners from different groups, can be involved in a number of nuclear processes, including gene activation, chromatin remodeling, replication and DNA repair. Using bimolecular fluorescence complementation assay and live cell imaging, we demonstrate that HP1β and PCNA, a key player in DNA replication, are closely spaced components of a multiprotein complex involved in replication, both in S phase and during DNA repair, and that the functional complex requires formation of an HP1 dimer.