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Interacting proteins
HP1 interacts with numerous other proteins to affect various cellular functions in different organisms. Some of these HP1 interacting partners are histone H1, histone H3, methylated K9 histone H3, histone H4, histone methyltransferase, DNA methyltransferase, methyl CpG binding protein MeCP2, and the origin recognition complex protein ORC2.

Binding affinity and cooperativity
HP1 has a versatile structure with three main components; a chromodomain, a chromoshadow domain, and a hinge domain. The chromodomain is responsible for the specific binding affinity of HP1 to histone H3 when tri-methylated at the 9th lysine residue. HP1 binding affinity to nucleosomes containing histone H3 methylated at lysine K9 is higher than to those with unmethylated lysine K9. HP1 binds nucleosomes as a dimer and can form multimeric complexes. Some studies have interpreted HP1 binding in terms of nearest-neighbor cooperative binding. However, the analysis of available data on HP1 binding to nucleosomal arrays in vitro shows that experimental HP1 binding isotherms can be explained by a simple model without cooperative interactions between neighboring HP1 dimers. Nevertheless, favorable interactions between nearest neighbors of HP1 lead to limited spreading of HP1 and its marks along the nucleosome chain in vivo.

This binding affinity of the HP1 chromodomain has also been implicated in regulation of alternative splicing. HP1 can act as both an enhancer and silencer of splicing alternative exons. The exact role it plays in regulation varies by gene and is dependent on the methylation patterns within the gene body. In humans, the role of HP1 on splicing has been characterized for the EDA gene. HP1 has been shown to act as a mediator protein for repression of alternative splicing of the EDA exon within the fibronectin gene. When the chromatin within the gene body is not methylated, HP1 does not bind and the EDA exon is transcribed. When the chromatin is methylated, HP1 binds the chromatin and recruits the splicing factor SRSF3 which binds HP1 and splices the EDA exon from the mature transcript. In this mechanism HP1 recognizes the H3K9me3 methylated chromatin and recruits a splicing factor to alternatively splice the mRNA, thereby excluding the EDA exon from the mature transcript.