Hypoacetylated histones are a hallmark of heterochromatin in organisms ranging from yeast to humans. Histone deacetylation is carried out by both NAD(+)-dependent and NAD(+)-independent enzymes. In the budding yeast Saccharomyces cerevisiae, deacetylation of histones in heterochromatic chromosomal domains requires Sir2, a phylogenetically conserved NAD(+)-dependent deacetylase. In the fission yeast Schizosaccharomyces pombe, NAD(+)-independent histone deacetylases are required for the formation of heterochromatin, but the role of Sir2-like deacetylases in this process has not been evaluated. Here, we show that spSir2, the S. pombe Sir2-like protein that is the most closely related to the S. cerevisiae Sir2, is an NAD(+)-dependent deacetylase that efficiently deacetylates histone H3 lysine 9 (K9) and histone H4 lysine 16 (K16) in vitro. In sir2 Delta cells, silencing at the donor mating-type loci, telomeres, and the inner centromeric repeats (imr) is abolished, while silencing at the outer centromeric repeats (otr) and rDNA is weakly reduced. Furthermore, Sir2 is required for hypoacetylation and methylation of H3-K9 and for the association of Swi6 with the above loci in vivo. Our findings suggest that the NAD(+)-dependent deacetylase Sir2 plays an important and conserved role in heterochromatin assembly in eukaryotes.