ABSTRACT The transcriptional silencing of the cryptic mating-type loci in Saccharomyces cerevisiae is one of the best-studied models of repressive heterochromatin. However, this type of heterochromatin, which is mediated by the Sir proteins, has a distinct molecular composition compared to the more ubiquitous type of heterochromatin found in Schizosaccharomyces pombe , other fungi, animals, and plants and characterized by the presence of HP1 (heterochromatin protein 1). This review discusses how the loss of important heterochromatin proteins, including HP1, in the budding yeast lineage presented an evolutionary opportunity for the development and diversification of alternative varieties of heterochromatin, in which the conserved deacetylase Sir2 and the replication protein Orc1 play key roles. In addition, we highlight how this diversification has been facilitated by gene duplications and has contributed to adaptations in lifestyle.