Grc3 is an evolutionarily conserved protein. Genome-wide budding yeast studies suggest that Grc3 is involved in rRNA processing. In the fission yeast Schizosaccharomyces pombe, Grc3 was identified as a factor exhibiting distinct nuclear dot localization, yet its exact physiological function remains unknown. Here, we show that S. pombe Grc3 is required for both rRNA processing and heterochromatic gene silencing. Cytological analysis revealed that Grc3 nuclear dots correspond to heterochromatic regions and that some Grc3 is also present in the nucleolar peripheral region. Depleting the heterochromatic proteins Swi6 or Clr4 abolished heterochromatic localization of Grc3 and resulted in its preferential accumulation in the perinucleolar region, suggesting its dynamic association with these nuclear compartments. Cells expressing mutant grc3 showed defects in 25 S rRNA maturation and in heterochromatic gene silencing. Protein analysis of Grc3-containing complexes led to the identification of Las1 and components of the IPI complex (Rix1, Ipi1, and Crb3). All of these Grc3-interacting proteins showed a dynamic nuclear localization similar to that observed for Grc3, and those conditional mutants showed defects in both rRNA processing and silencing of centromeric transcripts. Our data suggest that Grc3 functions cooperatively with Las1 and the IPI complex in both ribosome biogenesis and heterochromatin assembly.