The HIR complex, which is comprised of the four proteins Hir1, Hir2, Hir3 and Hpc2, was first characterized as a repressor of three of the four histone gene loci in Saccharomyces cerevisiae. Using a bioinformatical approach, previous studies have identified a region of Hpc2 that is conserved in Schizosaccharomyces pombe and humans. Using a similar approach, we identified two additional domains, CDI and CDII, of the Hpc2 protein that are conserved amongst yeast species related to S. cerevisiae. We showed that the N terminal CDI domain (spanning amino acids 63–79) is dispensable for HIR complex assembly, but plays an essential role in the repression of the histone genes by recruiting the HIR complex to the HIR-dependent histone gene loci. The second conserved domain, CDII (spanning amino acids 452–480), is required for the stability of the Hpc2 protein itself as well as for the assembly of the HIR complex. In addition, we report a novel separation-of-function mutation within CDI of Hpc2, which causes derepression of the histone genes but does not confer other reported hir/hpc-phenotypes (such as Spt phenotypes, heterochromatin silencing defects and repression of cryptic promoters). This is the first direct demonstration that a separation-of-function mutation exists within the HIR complex.