Cohesin, an SMC (structural maintenance of chromosomes) protein-containing complex, governs several important aspects of chromatin dynamics, including the essential chromosomal process of sister chromatid cohesion. The exact mechanism by which cohesin achieves the bridging of sister chromatids is not known. To elucidate this mechanism, we reconstituted a recombinant cohesin complex and investigated its binding to DNA fragments corresponding to natural chromosomal sites with high and low cohesin occupancy in vivo. Cohesin displayed uniform but nonspecific binding activity with all DNA fragments tested. Interestingly, DNA fragments with high occupancy by cohesin in vivo showed strong nucleosome positioning in vitro. We therefore utilized a defined model chromatin fragment (purified reconstituted dinucleosome) as a substrate to analyze cohesin interaction with chromatin. The four-subunit cohesin holocomplex showed a distinct chromatin binding activity in vitro, whereas the Smc1p-Smc3p dimer was unable to bind chromatin. Histone tails and ATP are dispensable for cohesin binding to chromatin in this reaction. A model for cohesin association with chromatin is proposed.