The mammalian cell nucleus is a dynamic and highly organized structure. Most proteins are mobile within the nuclear compartment, and this mobility reflects transient interactions with chromatin, as well as network interactions with a variety of protein partners. To study these dynamic processes in living cells, we developed an imaging method that combines the photoactivated green fluorescent protein (PA-GFP) and fluorescence resonance energy transfer (FRET) microscopy. We used this new method, photoquenching FRET (PQ-FRET), to define the dynamic interactions of the heterochromatin protein-1 alpha (HP1alpha) and the transcription factor CCAAT/enhancer binding protein alpha (C/EBPalpha) in regions of centromeric heterochromatin in mouse pituitary cells. The advantage of the PQ-FRET assay is that it provides simultaneous measurement of a protein's mobility, its exchange within macromolecular complexes and its interactions with other proteins in the living cell without the need for corrections based on reference images acquired from control cells.