Increasing experimental evidence shows a prominent role of histone modifications in the coordinated control of gene expression in the human malaria parasite Plasmodium falciparum. The search for the histone-mark-reading machinery that translates histone modifications into biological processes, such as formation of heterochromatin and antigenic variation is of foremost importance. In this work, we identified the first member of a histone modification specific recognition protein, an orthologue of heterochromatin protein 1 (PfHP1). Analysis of the PfHP1 amino-acid sequence revealed the presence of the two characteristic HP1 domains: a chromodomain (CD) and a chromo shadow domain (CSD). Recombinant CD binds to di- and tri-methylated lysine 9 from histone H3, but not to unmodified or methylated histone H3 in lysine 4. PfHP1 is able to interact with itself to form dimers, underlying its potential role in aggregating nucleosomes to form heterochromatin. Antibodies raised against PfHP1 detect this molecule in foci at the perinuclear region. ChIP analysis using anti-PfHP1 shows that this protein is linked to heterochromatin of subtelomeric non-coding repeat regions and monoallelic expression of the major virulence var gene family. This is the first report implicating an HP1 protein in the control of antigenic variation of a protozoan parasite.