The fission yeast, Schizosaccharomyces pombe, is a well-established model for heterochromatin formation, but the exact sequence of events for initiation remains to be elucidated. The essential factors involved include RNA transcribed from repeated sequences together with the methyltransferase Clr4. In addition, histone deacetylases, like Clr3, found in the SHREC complex are also necessary for transcriptional silencing. Clr2 is another crucial factor required for heterochromatin formation found in the SHREC complex. The function of Clr2 has been difficult to establish due to the lack of conserved domains or homology to proteins of known molecular function. Using a bioinformatics approach, three conserved motifs in Clr2 were identified, which contained amino acids important for transcriptional repression. Analysis of clr2 mutant strains revealed a major role for Clr2 in mating-type and rDNA silencing, and weaker effects on centromeric silencing. The effect on mating-type silencing showed variegation in several of the strains with mutated versions of Clr2 indicating an establishment or maintenance defect. Moreover, the critical amino acids in Clr2 were also necessary for transcriptional repression in a minimal system, by the tethering of Clr4 upstream of a reporter gene, inserted into the euchromatic part of the genome. Finally, in silico modeling suggested that the mutations in Clr2 cause disruption of secondary structures in the Clr2 protein. Identification of these critical amino acids in the protein provides a useful tool to explore the molecular mechanism behind the role of Clr2 in heterochromatin formation.