Heterochromatin protein 1 (HP1) is a conserved chromosomal protein with important roles in chromatin packaging and gene silencing. In fission yeast, two HP1 family proteins, Swi6 and Chp2, are involved in transcriptional silencing at heterochromatic regions, but how they function and whether they act cooperatively or differentially in heterochromatin assembly remain elusive. Here, we show that both Swi6 and Chp2 are required for the assembly of fully repressive heterochromatin, in which they play distinct, nonoverlapping roles. Swi6 is expressed abundantly and plays a dose-dependent role in forming a repressive structure through its self-association property. In contrast, Chp2, expressed at a lower level, does not show a simple dose-dependent repressive activity. However, it contributes to the recruitment of chromatin-modulating factors Clr3 and Epe1 and possesses a novel ability to bind the chromatin-enriched nuclear subfraction that is closely linked with its silencing function. Finally, we demonstrate that a proper balance between Swi6 and Chp2 is critical for heterochromatin assembly. Our findings provide novel insight into the distinct and cooperative functions of multiple HP1 family proteins in the formation of higher-order chromatin structure.