The hallmarks of chromosome organization in multicellular eukaryotes are chromosome territories (CT), chromatin compartments, and different types of domains, including topologically associated domains (TADs). Yet, most of these concepts derive from analyses of organisms with monocentric chromosomes. Here we describe the 3D genome architecture of an organism with holocentric chromosomes, the silkwormBombyx mori. At the genome-wide scale,B. morichromosomes form highly separated territories and lack substantial trans contacts. As described in other eukaryotes,B. morichromosomes segregate into an active A and an inactive B compartment. Remarkably, we also identify a third compartment, Secluded »S», with a unique contact pattern. Compartment S shows strong enrichment of short-range contacts and depletion of long-range contacts. It hosts a unique combination of genetic and epigenetic features, localizes at the periphery of CTs and shows developmental plasticity. Biophysical modeling shows that formation of such secluded domains requires a new mechanism – a high density of extruded loops within them along with low level of extrusion and compartmentalization of A and B. Together with other evidence of loop extrusion in interphase, this suggests SMC-mediated loop extrusion in this insect. Overall, our analyses highlight the evolutionary plasticity of 3D genome organization driven by a new combination of known processes.