HP1 (Heterochromatin protein 1) is a conserved, non-histone chromosomal protein that is best known for its preferential binding to pericentric heterochromatin and its role in position effect variegation in Drosophila. Using immunolocalization, we show that HP1 is a constant feature of the telomeres of interphase polytene and mitotic chromosomes. This localization does not require the presence of telomeric retrotransposons, since HP1 is also detected at the ends of terminally deleted chromosomes that lack these elements. Importantly, larvae expressing reduced or mutant versions of HP1 exhibit aberrant chromosome associations and multiple telomeric fusions in neuroblast cells, imaginal disks, and male meiotic cells. Taken together, these results provide evidence that HP1 plays a functional role in mediating normal telomere behavior in Drosophila.