Mammalian TIF1alpha and TIF1beta (KAP-1/KRIP-1) are related transcriptional intermediary factors that possess intrinsic silencing activity. TIF1alpha is believed to be a euchromatic target for liganded nuclear receptors, while TIF1beta may serve as a co-repressor for the large family of KRAB domain-containing zinc finger proteins. Here, we report an association of TIF1beta with both heterochromatin and euchromatin in interphase nuclei. Co-immunoprecipitation of nuclear extracts shows that endogenous TIF1beta, but not TIF1alpha, is associated with members of the heterochromatin protein 1 (HP1) family. However, in vitro, both TIF1alpha and TIF1beta interact with and phosphorylate the HP1 proteins. This interaction involves a conserved amino acid motif, which is critical for the silencing activity of TIF1beta but not TIF1alpha. We further show that trichostatin A, an inhibitor of histone deacetylases, can interfere with both TIF1 and HP1 silencing. The silencing activity of TIF1alpha appears to result chiefly from histone deacetylation, whereas that of TIF1beta may be mediated via both HP1 binding and histone deacetylation.