Extensive genome-wide rearrangements occur during somatic macronuclear development in Tetrahymena thermophila. These events are guided by RNA interference-directed chromatin modification including histone H3 lysine 9 methylation, which marks specific germ line-limited internal eliminated sequences (IESs) for excision. Several genes putatively involved in these developmental genome rearrangements were identified based on their proteins' localization to differentiating somatic nuclei, and here we demonstrate that one, LIA1, encodes a novel protein that is an essential component of the genome rearrangement machinery. A green fluorescent protein-Lia1 fusion protein exhibited dynamic nuclear localization during development that has striking similarity to that of the dual chromodomain-containing DNA rearrangement protein, Pdd1p. Coimmunoprecipitation experiments showed that Lia1p associates with Pdd1p and IES chromatin during macronuclear development. Cell lines in which we disrupted both the germ line and somatic copies of LIA1 (DeltaLIA1) grew normally but were unable to generate viable progeny, arresting late in development just prior to returning to vegetative growth. These mutant lines failed to properly form Pdd1p-containing nuclear structures and eliminate IESs despite showing normal levels of H3K9 methylation. These data indicate that Lia1p is required late in conjugation for the reorganization of the Tetrahymena genome.