Centromere identity and its epigenetic maintenance require the incorporation of a histone H3 variant called CENP-A at centromeres. CENP-A mislocalization to ectopic sites may disrupt chromatin-based processes and chromosome segregation, so it is important to uncover the mechanisms by which this variant is exclusively localized to centromeres. Here, we identify a role for the conserved chromatin-modifying complex FACT (facilitates chromatin transcription/transactions) in preventing budding yeast CENP-A(Cse4) mislocalization to euchromatin by mediating its proteolysis. The Spt16 subunit of the FACT complex binds to Psh1 (Pob3/Spt16/histone), an E3 ubiquitin ligase that targets CENP-A(Cse4) for degradation. The interaction between Psh1 and Spt16 is critical for both CENP-A(Cse4) ubiquitylation and its exclusion from euchromatin. We found that Psh1 cannot efficiently ubiquitylate CENP-A(Cse4) nucleosomes in vitro, suggesting that additional factors must facilitate CENP-A(Cse4) removal from chromatin in vivo. Consistent with this, a Psh1 mutant that cannot associate with FACT has a reduced interaction with CENP-A(Cse4) in vivo. Together, our data identify a previously unknown mechanism to maintain centromere identity and genomic stability through the FACT-mediated degradation of ectopically localized CENP-A(Cse4).