The repair of DNA damage in highly compact, transcriptionally silent heterochromatin requires that repair and chromatin packaging machineries be tightly coupled and regulated. KAP1 is a heterochromatin protein and co-repressor that binds to HP1 during gene silencing but is also robustly phosphorylated by Ataxia telangiectasia mutated (ATM) at serine 824 in response to DNA damage. The interplay between HP1-KAP1 binding/ATM phosphorylation during DNA repair is not known. We show that HP1α and unmodified KAP1 are enriched in endogenous heterochromatic loci and at a silent transgene prior to damage. Following damage, γH2AX and pKAP1-s824 rapidly increase and persist at these loci. Cells that lack HP1 fail to form discreet pKAP1-s824 foci after damage but levels are higher and more persistent. KAP1 is phosphorylated at serine 473 in response to DNA damage and its levels are also modulated by HP1. Unlike pKAP1-s824, pKAP1-s473 does not accumulate at damage foci but is diffusely localized in the nucleus. While HP1 association tempers KAP1 phosphorylation, this interaction also slows the resolution of γH2AX foci. Thus, HP1-dependent regulation of KAP1 influences DNA repair in heterochromatin. Mol Cancer Res; 10(3); 401–14. ©2011 AACR.