Constitutive heterochromatin is an important component of eukaryotic genomes 
that has essential roles in nuclear architecture, DNA repair and genome 
stability, and silencing of transposon and gene expression. Heterochromatin is 
highly enriched for repetitive sequences, and is defined epigenetically by 
methylation of histone H3 at lysine 9 and recruitment of its binding partner 
heterochromatin protein 1 (HP1). A prevalent view of heterochromatic silencing 
is that these and associated factors lead to chromatin compaction, resulting in 
steric exclusion of regulatory proteins such as RNA polymerase from the 
underlying DNA. However, compaction alone does not account for the formation of 
distinct, multi-chromosomal, membrane-less heterochromatin domains within the 
nucleus, fast diffusion of proteins inside the domain, and other dynamic 
features of heterochromatin. Here we present data that support an alternative 
hypothesis: that the formation of heterochromatin domains is mediated by phase 
separation, a phenomenon that gives rise to diverse non-membrane-bound nuclear, 
cytoplasmic and extracellular compartments. We show that Drosophila HP1a protein 
undergoes liquid-liquid demixing in vitro, and nucleates into foci that display 
liquid properties during the first stages of heterochromatin domain formation in 
early Drosophila embryos. Furthermore, in both Drosophila and mammalian cells, 
heterochromatin domains exhibit dynamics that are characteristic of liquid 
phase-separation, including sensitivity to the disruption of weak hydrophobic 
interactions, and reduced diffusion, increased coordinated movement and inert 
probe exclusion at the domain boundary. We conclude that heterochromatic domains 
form via phase separation, and mature into a structure that includes liquid and 
stable compartments. We propose that emergent biophysical properties associated 
with phase-separated systems are critical to understanding the unusual 
behaviours of heterochromatin, and how chromatin domains in general regulate 
essential nuclear functions.