In S. cerevisiae, posttranslational modification by the ubiquitin-like Smt3/SUMO-1 protein is essential for survival, but functions and cellular targets for this modification are largely unknown. We find that one function associated with the Smt3/SUMO-1 isopeptidase Smt4 is to control chromosome cohesion at centromeric regions and that a key Smt3/SUMO-1 substrate underlying this function is Top2, DNA Topoisomerase II. Top2 modification by Smt3/SUMO-1 is misregulated in smt4 strains, and top2 mutants resistant to Smt3/SUMO-1 modification suppress the smt4 cohesion defect. top2 mutants display aberrant chromatid stretching at the centromere in response to mitotic spindle tension and altered chromatid reassociation following microtubule depolymerization. These results suggest Top2 modification by Smt3/SUMO-1 regulates a component of chromatin structure or topology required for centromeric cohesion.