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The budding yeast centromere contains Cse4, a specialized histone H3 variant. Fluorescence pulse-chase analysis of an internally tagged Cse4 reveals that it is replaced with newly synthesized molecules in S phase, remaining stably associated with centromeres thereafter. In contrast, C-terminally-tagged Cse4 is functionally impaired, showing slow cell growth, cell lethality at elevated temperatures, and extra-centromeric nuclear accumulation. Recent studies using such strains gave conflicting findings regarding the centromeric abundance and cell cycle dynamics of Cse4. Our findings indicate that internally tagged Cse4 is a better reporter of the biology of this histone variant. Furthermore, the size of centromeric Cse4 clusters was precisely mapped with a new 3D-PALM method, revealing substantial compaction during anaphase. Cse4-specific chaperone Scm3 displays steady-state, stoichiometric co-localization with Cse4 at centromeres throughout the cell cycle, while undergoing exchange with a nuclear pool. These findings suggest that a stable Cse4 nucleosome is maintained by dynamic chaperone-in-residence Scm3.DOI: http://dx.doi.org/10.7554/eLife.02203.001.