AbstractIn eukaryotes, DNA is packaged into chromatin, which presents significant barriers to transcription. Non-histone chromatin proteins such as the Heterochromatin Protein 1 (HP1) proteins are critical regulators of transcription, contributing to gene regulation through a variety of molecular mechanisms. HP1 proteins are highly conserved, and many eukaryotic genomes contain multiple HP1 genes. Given the presence of multiple HP1 family members within a genome, HP1 proteins can have unique as well as shared functions. Here, we review the mechanisms by which HP1 proteins contribute to the regulation of transcription. Focusing on the Drosophila melanogaster HP1 proteins, we examine the role of these proteins in regulating the transcription of genes, transposable elements, and piRNA clusters. In D. melanogaster, as in other species, HP1 proteins can act as transcriptional repressors and activators. The available data reveal that the precise impact of HP1 proteins on gene expression is highly context dependent, on the specific HP1 protein involved, on its protein partners present, and on the specific chromatin context the interaction occurs in. As a group, HP1 proteins utilize a variety of mechanisms to contribute to transcriptional regulation, including both transcriptional (i.e. chromatin-based) and post-transcriptional (i.e. RNA-based) processes. Despite extensive studies of this important protein family, open questions regarding their functions in gene regulation remain, specifically regarding the role of hetero- versus homodimerization and post-translational modifications of HP1 proteins.