The eyegone (eyg) gene encodes Eyg, a transcription factor of the Pax family with multiple roles during Drosophila development. Although Eyg has been shown to act as a repressor, nothing is known about the mechanism by which it represses its target genes. Here, we show that Eyg forms a protein complex with heterochromatin protein 1a (HP1a). Both proteins bind to the same chromatin regions on polytene chromosomes and act cooperatively to suppress variegation and mediate gene silencing. In addition, Eyg binds to a wingless (wg) enhancer region, recruiting HP1a to assemble a closed, heterochromatin-like conformation that represses transcription of the wg gene. We describe here the evidence that suggests that Eyg, encoded by eyegone (eyg), represses wingless (wg) during eye development by association with HP1a. We show that Eyg forms a protein complex with HP1a and both proteins colocalize on salivary gland polytene chromosomes. Using position effect variegation (PEV) experiments, we demonstrated that eyg has a dose-dependent effect on heterochromatin gene silencing and identified a genetic interaction with HP1a in this process. We further demonstrated that HP1a binds to the same wg enhancer element as Eyg. DNase I sensitivity assays indicated that this enhancer region has a closed heterochromatin-like conformation, which becomes open in eyg mutants. In these mutants, much less HP1a binds to the wg enhancer region, as shown by ChIP experiments. Furthermore, as previously described for Eyg, a reduction in the amount of HP1a in the eye imaginal disc derepresses wg. Together, our results suggest a model in which Eyg specifically binds to the wg enhancer region, recruiting HP1a to that site. The recruitment of HP1a prevents transcription by favoring a closed, heterochromatin-like structure. Thus, for the first time, we show that HP1a plays a direct role in the repression of a developmentally regulated gene, wg, during Drosophila eye development.