Heterochromatin protein 1α (HP1α) is involved in regulation of chromatin plasticity, DNA damage repair, and centromere dynamics. HP1α detects histone dimethylation and trimethylation of Lys-9 via its chromodomain. HP1α localizes to heterochromatin in interphase cells but is liberated from chromosomal arms at the onset of mitosis. However, the structural determinants required for HP1α localization in interphase and the regulation of HP1α dynamics have remained elusive. Here we show that centromeric localization of HP1α depends on histone H3 Lys-9 trimethyltransferase SUV39H1 activity in interphase but not in mitotic cells. Surprisingly, HP1α liberates from chromosome arms in early mitosis. To test the role of this dissociation, we engineered an HP1α construct that persistently localizes to chromosome arms. Interestingly, persistent localization of HP1α to chromosome arms perturbs accurate kinetochore-microtubule attachment due to an aberrant distribution of chromosome passenger complex and Sgo1 from centromeres to chromosome arms that prevents resolution of sister chromatids. Further analyses showed that Mis14 and perhaps other PXVXL-containing proteins are involved in directing localization of HP1α to the centromere in mitosis. Taken together, our data suggest a model in which spatiotemporal dynamics of HP1α localization to centromere is governed by two distinct structural determinants. These findings reveal a previously unrecognized but essential link between HP1α-interacting molecular dynamics and chromosome plasticity in promoting accurate cell division.