We study hyperbolic structures on the compression body C with genus 2 positive boundary and genus 1 negative boundary. We consider individual hyperbolic structures as well as special regions in the space of all such hyperbolic structures. We use some properties of the boundary hyperbolic structures on C to establish an interesting property of cusp shapes of tunnel number one manifolds. This extends a result of Nimershiem in [26] to the class of tunnel number one manifolds. We also establish convergence results on the geometry of compression bodies. This extends the work of Ito in [13] from the punctured-torus case to the compression body case.