Structure chromosome (SMC) proteins organize the core of cohesin, condensin and Smc5-Smc6 complexes. The Smc5-Smc6 complex is required for DNA repair, as well as having another essential but enigmatic function. Here, we generated conditional mutants of SMC5 and SMC6 in budding yeast, in which the essential function was affected. We show that mutant smc5-6 and smc6-9 cells undergo an aberrant mitosis in which chromosome segregation of repetitive regions is impaired; this leads to DNA damage and RAD9-dependent activation of the Rad53 protein kinase. Consistent with a requirement for the segregation of repetitive regions, Smc5 and Smc6 proteins are enriched at ribosomal DNA (rDNA) and at some telomeres. We show that, following Smc5-Smc6 inactivation, metaphase-arrested cells show increased levels of X-shaped DNA (Holliday junctions) at the rDNA locus. Furthermore, deletion of RAD52 partially suppresses the temperature sensitivity of smc5-6 and smc6-9 mutants. We also present evidence showing that the rDNA segregation defects of smc5/smc6 mutants are mechanistically different from those previously observed for condensin mutants. These results point towards a role for the Smc5-Smc6 complex in preventing the formation of sister chromatid junctions, thereby ensuring the correct partitioning of chromosomes during anaphase.