Inactivation of retrotransposons is accompanied by the emergence of centromere-binding protein-B (CENPB) in  Schizosaccharomyces , as well as in metazoans. The RNA interference (RNAi)-induced transcriptional silencing (RITS) complex, comprising chromodomain protein-1 (Chp1), Tas3 (protein with unknown function), and Argonaute (Ago1), plays an important role in RNAi-mediated heterochromatinization. We find that whereas the Ago1 subunit of the RITS complex is highly conserved, Tas3 is lost and Chp1 is truncated in  Schizosaccharomyces cryophilus  and  Schizosaccharomyces octosporus  We show that truncated Chp1 loses the property of heterochromatin localization and silencing when transformed in  Schizosaccharomyces pombe  Furthermore, multiple copies of CENPB, related to  Tc1/mariner and Tc5  transposons, occur in all  Schizosaccharomyces  species, as well as in humans, but with loss of transposase function (except  Schizosaccharomyces japonicus ). We propose that acquisition of  Tc1/mariner and Tc5  elements by horizontal transfer in  S. pombe  (and humans) is accompanied by alteration of their function from a transposase/endonuclease to a heterochromatin protein, designed to suppress transposon expression and recombination. The resulting redundancy of RITS may have eased the selection pressure, resulting in progressive loss or truncation of  tas3  and  chp1  genes in  S. octosporus  and  S. cryophilus  and triggered similar evolutionary dynamics in the metazoan orthologues.