Eukaryotic cells inherit their genomes in the form of chromosomes, which are formed from the compaction of interphase chromatin by the condensin complex. Condensin is a member of the structural maintenance of chromosomes (SMC) family of ATPases, large ring-shaped protein assemblies that entrap DNA to establish chromosomal interactions. Here, we use the budding yeast Saccharomyces cerevisiae to dissect the role of the condensin ATPase and its relationship with cell-cycle-regulated chromosome binding dynamics. ATP hydrolysis-deficient condensin binds to chromosomes but is defective in chromosome condensation and segregation. By modulating the ATPase, we demonstrate that it controls condensin's dynamic turnover on chromosomes. Mitosis-specific phosphorylation of condensin's Smc4 subunit reduces the turnover rate. However, reducing turnover by itself is insufficient to compact chromosomes. We propose that condensation requires fine-tuned dynamic condensin interactions with more than one DNA. These results enhance our molecular understanding of condensin function during chromosome condensation.