The histone H3 variant CENP-A assembles into chromatin exclusively at centromeres. The process of CENP-A chromatin assembly is epigenetically regulated. Fission yeast centromeres are composed of a central kinetochore domain on which CENP-A chromatin is assembled, and this is flanked by heterochromatin. Marker genes are silenced when placed within kinetochore or heterochromatin domains. It is not known if fission yeast CENP-A(Cnp1) chromatin is confined to specific sequences or whether histone H3 is actively excluded. Here, we show that fission yeast CENP-A(Cnp1) can assemble on noncentromeric DNA when it is inserted within the central kinetochore domain, suggesting that in fission yeast CENP-A(Cnp1) chromatin assembly is driven by the context of a sequence rather than the underlying DNA sequence itself. Silencing in the central domain is correlated with the amount of CENP-A(Cnp1) associated with the marker gene and is also affected by the relative level of histone H3. Our analyses indicate that kinetochore integrity is dependent on maintaining the normal ratio of H3 and H4. Excess H3 competes with CENP-A(Cnp1) for assembly into central domain chromatin, resulting in less CENP-A(Cnp1) and other kinetochore proteins at centromeres causing defective kinetochore function, which is manifest as aberrant mitotic chromosome segregation. Alterations in the levels of H3 relative to H4 and CENP-A(Cnp1) influence the extent of DNA at centromeres that is packaged in CENP-A(Cnp1) chromatin and the composition of this chromatin. Thus, CENP-A(Cnp1) chromatin assembly in fission yeast exhibits plasticity with respect to the underlying sequences and is sensitive to the levels of CENP-A(Cnp1) and other core histones.