Heterochromatin protein 1 (HP1) is commonly seen as a key factor of repressive heterochromatin, even though a few genes are known to require HP1-chromatin for their expression. To obtain insight into the targeting of HP1 and its interplay with other chromatin components, we have mapped HP1-binding sites on Chromosomes 2 and 4 in Drosophila Kc cells using high-density oligonucleotide arrays and the DNA adenine methyltransferase identification (DamID) technique. The resulting high-resolution maps show that HP1 forms large domains in pericentric regions, but is targeted to single genes on chromosome arms. Intriguingly, HP1 shows a striking preference for exon-dense genes on chromosome arms. Furthermore, HP1 binds along entire transcription units, except for 5' regions. Comparison with expression data shows that most of these genes are actively transcribed. HP1 target genes are also marked by the histone variant H3.3 and dimethylated histone 3 lysine 4 (H3K4me2), which are both typical of active chromatin. Interestingly, H3.3 deposition, which is usually observed along entire transcription units, is limited to the 5' ends of HP1-bound genes. Thus, H3.3 and HP1 are mutually exclusive marks on active chromatin. Additionally, we observed that HP1-chromatin and Polycomb-chromatin are nonoverlapping, but often closely juxtaposed, suggesting an interplay between both types of chromatin. These results demonstrate that HP1-chromatin is transcriptionally active and has extensive links with several other chromatin components.