Abstract. Let S = (S 1 , . . . , S d ) denote the compression of the dshift to the complement of a homogeneous ideal I of C[z 1 , . . . , z d ].Arveson conjectured that S is essentially normal. In this paper, we establish new results supporting this conjecture, and connect the notion of essential normality to the theory of the C*-envelope and the noncommutative Choquet boundary.The unital norm closed algebra B I generated by S 1 , . . . , S d modulo the compact operators is shown to be completely isometrically isomorphic to the uniform algebra generated by polynomials on V := Z(I) ∩ B d , where Z(I) is the variety corresponding to I. Consequently, the essential norm of an element in B I is equal to the sup norm of its Gelfand transform, and the C*-envelope of B I is identified as the algebra of continuous functions on V ∩ ∂B d , which means it is a complete invariant of the topology of the variety determined by I in the ball.Motivated by this determination of the C*-envelope of B I , we suggest a new, more qualitative approach to the problem of essential normality. We prove the tuple S is essentially normal if and only if it is hyperrigid as the generating set of a C*-algebra, which is a property closely connected to Arveson's notion of a boundary representation.We show that most of our results hold in a much more general setting. In particular, for most of our results, the ideal I can be replaced by an arbitrary (not necessarily homogeneous) invariant subspace of the d-shift.2010 Mathematics Subject Classification. 47A13, 47L30, 46E22.