Group completions via Hilbert schemes

Let $X$ be a projective variety, homogeneous under a linear algebraic group. We show that the diagonal of $X$ belongs to a unique irreducible component $H_X$ of the Hilbert scheme of $X\times X$. Moreover, $H_X$ is isomorphic to the ``wonderful completion'' of the connected automorphism group of $X$; in particular, $H_X$ is non-singular. We describe explicitly the degenerations of the diagonal in $X\times X$, that is, the points of $H_X$; these subschemes of $X\times X$ are reduced and Cohen-Macaulay.