Regulation of transposable elements (TEs) is critical to the integrity of the host genome. The fission yeast Schizosaccharomyces pombe homologs of mammalian CENP-B perform a host genome surveillance role by controlling Tf2 long terminal repeat (LTR) retrotransposons. However, the mechanisms by which CENP-Bs effect their functions are ill defined. Here, we show that the multifaceted roles of Abp1, the prominent member of fission yeast CENP-Bs, are mediated in part via recognition of a 10-bp AT-rich motif present in most LTRs and require the DNA-binding, transposase, and dimerization domains of Abp1 to maintain transcriptional repression and genome organization. Expression profiling analyses indicated that Abp1 recruits class I/II histone deacetylases (HDACs) to repress Tf2 retrotransposons and genes activated in response to stresses. We demonstrate that class I/II HDACs and sirtuins mediate the clustering of dispersed Tf2 retrotransposons into Tf bodies. Intriguingly, we uncovered an unexpected cooperation between Abp1 and the histone H3K4 methyltransferase Set1 in regulating sense and antisense transcriptional silencing of Tf2 retrotransposons and Tf body integrity. Moreover, Set1-mediated regulation of Tf2 expression and nuclear organization appears to be largely independent of H3K4 methylation. Our study illuminates a molecular pathway involving a transposase-containing transcription factor that cooperates with chromatin modifiers to regulate TE activities.