We have used a human artificial chromosome (HAC) to manipulate the epigenetic state of chromatin within an active kinetochore. The HAC has a dimeric alpha-satellite repeat containing one natural monomer with a CENP-B binding site, and one completely artificial synthetic monomer with the CENP-B box replaced by a tetracycline operator (tetO). This HAC exhibits normal kinetochore protein composition and mitotic stability. Targeting of several tet-repressor (tetR) fusions into the centromere had no effect on kinetochore function. However, altering the chromatin state to a more open configuration with the tTA transcriptional activator or to a more closed state with the tTS transcription silencer caused missegregation and loss of the HAC. tTS binding caused the loss of CENP-A, CENP-B, CENP-C, and H3K4me2 from the centromere accompanied by an accumulation of histone H3K9me3. Our results reveal that a dynamic balance between centromeric chromatin and heterochromatin is essential for vertebrate kinetochore activity.