Chromatin structure regulates the dynamics of the recognition and repair of DNA double strand breaks; open chromatin enhances the recruitment of DNA damage response factors, while compact chromatin is refractory to the assembly of radiation-induced repair foci. MU2, an orthologue of human MDC1, a scaffold for ionizing radiation-induced repair foci, is a widely distributed chromosomal protein in Drosophila melanogaster that moves to DNA repair foci after irradiation. Here we show using yeast 2 hybrid screens and co-immunoprecipitation that MU2 binds the chromoshadow domain of the heterochromatin protein HP1 in untreated cells. We asked what role HP1 plays in the formation of repair foci and cell cycle control in response to DNA damage. After irradiation repair foci form in heterochromatin but are shunted to the edge of heterochromatic regions an HP1-dependent manner, suggesting compartmentalized repair. Hydroxyurea-induced repair foci that form at collapsed replication forks, however, remain in the heterochromatic compartment. HP1a depletion in irradiated imaginal disc cells increases apoptosis and disrupts G2/M arrest. Further, cells irradiated in mitosis produced more and brighter repair foci than to cells irradiated during interphase. Thus, the interplay between MU2 and HP1a is dynamic and may be different in euchromatin and heterochromatin during DNA break recognition and repair.