Heterochromatin protein 1 (HP1) has an essential role in heterochromatin formation and mitotic progression through its interaction with various proteins. We have identified a unique HP1alpha-binding protein, POGZ (pogo transposable element-derived protein with zinc finger domain), using an advanced proteomics approach. Proteins generally interact with HP1 through a PxVxL (where x is any amino-acid residue) motif; however, POGZ was found to bind to HP1alpha through a zinc-finger-like motif. Binding by POGZ, mediated through its zinc-finger-like motif, competed with PxVxL proteins and destabilized the HP1alpha-chromatin interaction. Depletion experiments confirmed that the POGZ HP1-binding domain is essential for normal mitotic progression and dissociation of HP1alpha from mitotic chromosome arms. Furthermore, POGZ is required for the correct activation and dissociation of Aurora B kinase from chromosome arms during M phase. These results reveal POGZ as an essential protein that links HP1alpha dissociation with Aurora B kinase activation during mitosis.