ABSTRACT PA28γ (also known as PSME3), a nuclear activator of the 20S proteasome, is involved in the degradation of several proteins regulating cell growth and proliferation and in the dynamics of various nuclear bodies, but its precise cellular functions remain unclear. Here, using a quantitative FLIM-FRET based microscopy assay monitoring close proximity between nucleosomes in living human cells, we show that PA28γ controls chromatin compaction. We find that its depletion induces a decompaction of pericentromeric heterochromatin, which is similar to what is observed upon the knockdown of HP1β (also known as CBX1), a key factor of the heterochromatin structure. We show that PA28γ is present at HP1β-containing repetitive DNA sequences abundant in heterochromatin and, importantly, that HP1β on its own is unable to drive chromatin compaction without the presence of PA28γ. At the molecular level, we show that this novel function of PA28γ is independent of its stable interaction with the 20S proteasome, and most likely depends on its ability to maintain appropriate levels of H3K9me3 and H4K20me3, histone modifications that are involved in heterochromatin formation. Overall, our results implicate PA28γ as a key factor involved in the regulation of the higher order structure of chromatin.