Drosophila melanogaster HP1-interacting protein (Hip) is a partner of heterochromatin protein 1 (HP1) and is involved in transcriptional epigenetic gene silencing and the formation of heterochromatin. Recently, it has been shown that HP1 interacts with the telomere capping factor HP1/ORC (origin recognition complex)-associated protein (HOAP). Telomeres, complexes of DNA and proteins at the end of linear chromosomes, have been recognized to protect chromosome ends from degradation and fusion events. Both proteins are located at telomeres and prevent telomere fusions. Here, we report the identification and characterization of the Hip-interacting protein Umbrea. We found that Umbrea interacts directly with Hip, HP1 and HOAP in vitro. Umbrea, Hip and HP1 are partners in a protein complex in vivo and completely co-localize in the pericentric heterochromatin and at telomeres. Using a Gal4-induced RNA interference system, we found that after depletion of Umbrea in salivary gland polytene chromosomes, they exhibit multiple telomeric fusions. Taken together, these results suggest that Umbrea cooperates with Hip, HP1 and HOAP and plays a functional role in mediating normal telomere behaviour in Drosophila.