Cohesins establish cohesion between replicated sister chromatids and are maintained as a multiprotein complex on chromosome arms until they are phosphorylated by mitotic kinases, such as Aurora B and Plk1. However, the mechanics of how the phosphorylation and dephosphorylation of cohesin subunits by kinases and phosphatases, respectively, leads to the dissociation of the cohesin complex from chromosomes remain unclear. Here we report that Aurora B kinase directly interacts with and phosphorylates Ssu72, a new cohesin-binding phosphatase, at Ser 19 in vitro and in vivo. The Aurora B-mediated phosphorylation of Ssu72 causes the structural modification of Ssu72 protein, downregulates phosphatase activity and triggers the ubiquitin-dependent degradation of Ssu72. Overexpression of the Aurora B-mediated phosphomimetic mutant of Ssu72 prevents maintainance chromosome arm cohesion. These results provide evidence that Aurora B kinase directly targets Ssu72 phosphatase for regulation of sister chromatid cohesion during early mitosis.