In eukaryotic cells, structures called heterochromatin play critical roles in nuclear processes ranging from gene repression to chromosome segregation. Biochemical and in vivo studies over the past several decades have implied that the diverse functions of heterochromatin rely on the ability of these structures to spread across large regions of the genome, to compact the underlying DNA, and to recruit different types of activities. Recent observations have suggested that heterochromatin may possess liquid droplet-like properties. Here, we discuss how these observations provide a new perspective on the mechanisms for the assembly, regulation, and functions of heterochromatin.