The KRAB-zinc finger proteins (KRAB-ZFPs) represent a very large, but poorly understood, family of transcriptional regulators in mammals. They are thought to repress transcription via their interaction with KRAB-associated protein 1 (KAP1), which then assembles a complex of chromatin modifiers to lay down histone marks that are associated with inactive chromatin. Studies of KRAB-ZFP/KAP1-mediated gene silencing, using reporter constructs and ectopically expressed proteins, have shown colocalisation of both KAP1 and repressed reporter target genes to domains of constitutive heterochromatin in the nucleus. However, we show here that although KAP1 does indeed become recruited to pericentric heterochromatin during differentiation of mouse embryonic stem (ES) cells, endogenous KRAB-ZFPs do not. Rather, KRAB-ZFPs and KAP1 relocalise to novel nucleoplasmic foci that we have termed KRAB- and KAP1-associated (KAKA) foci. HP1s can also concentrate in these foci and there is a close spatial relationship between KAKA nuclear foci and PML nuclear bodies. Finally, we reveal differential requirements for the recruitment of KAP1 to pericentric heterochromatin and KAKA foci, and suggest that KAKA foci may contain sumoylated KAP1 - the form of the protein that is active in transcriptional repression.