Heterochromatin is the gene-poor, transposon-rich, late-replicating chromatin compartment that was first cytologically defined more than 70 years ago. The identification of heterochromatin protein 1 (HP1) paved the way for a molecular dissection of this important component of complex eukaryotic genomes. Although initial studies revealed HP1's key role in heterochromatin maintenance and function, more recent studies have discovered a role for HP1 in numerous processes including, surprisingly, euchromatic gene expression. Drosophila genomes possess at least five HP1 paralogs that have significantly different roles, ranging from canonical heterochromatic function at pericentric and telomeric regions to exclusive localization and regulation of euchromatic genes. They also possess paralogs exclusively involved in defending the germline against mobile elements. Pursuing a survey of recent genetic and evolutionary findings, we highlight how Drosophila genomes represent the best opportunity to dissect the diversity and incredible versatility of HP1 proteins in organizing and protecting eukaryotic genomes.