ARF-like proteins (ARLs) are distinct group of members of the ARF family of Ras-related GTPases. Although ARLs are very similar in primary structure to ARFs, their functions remain unclear. We cloned mouse (m) and human (h) ARL5 cDNAs to characterize the protein products and their molecular properties. mARL5 mRNA was more abundant in liver than in other adult tissues tested. mARL5, similar to mARL4, was developmentally regulated and localized to nuclei. hARL5 interacted with importin-alpha through its C-terminal bipartite nuclear localization signal. When expressed in COS-7 cells, mutant hARL5(T35N), which is predicted to be GDP bound, was concentrated in nucleoli. The N-terminus of hARL5, like that of ARF, was myristoylated. Yeast two-hybrid screening and in vitro protein-interaction assays showed that hARL5(Q80L), predicted to be GTP bound, interacted with heterochromatin protein 1alpha (HP1alpha), which is known to be associated with telomeres as well as with heterochromatin, and acted as a transcriptional suppressor in mammalian cells. The interaction was reproduced in COS cells, where hARL5(Q80L) was co-immunoprecipitated with HP1alpha. hARL5 interaction with HP1alpha was dependent on the nucleotide bound, and required the MIR-like motif. Moreover, hARL5(Q80L), but not hARL5 lacking the MIR-like motif, was partly co-localized with overexpressed HP1alpha. Our findings suggest that developmentally regulated ARL5, with its distinctive nuclear/nucleolar localization and interaction with HP1alpha, may play a role(s) in nuclear dynamics and/or signaling cascades during embryonic development.