BACKGROUND: The Cohesin complex that holds sister chromatins together until anaphase is comprised of three core subunits: Smc1 and Smc3, two long-rod-shaped proteins with an ABC-like ATPase head (nucleotide-binding domain [NBD]) and a dimerization domain linked by a 50 nm long intramolecular antiparallel coiled-coil, and Scc1, an α-kleisin subunit interconnecting the NBD domains of Smc1 and Smc3. Cohesin's stable association with chromosomes is thought to involve entrapment of chromatin fibers by its tripartite Smc1-Smc3-Scc1 ring via a poorly understood mechanism dependent on a separate Scc2/4 loading complex. A key issue concerns where entrapment initially takes place: at sites where cohesin is found stably associated or at distinct "loading" sites from which it translocates. RESULTS: In this study, we find transition state mutant versions (Smc1E1158Q and SmcE1155Q) defective in disengagement of their nucleotide binding domains (NBDs), unlike functional cohesin, colocalize with Scc2/4 at core centromeres, sites that catalyze wild-type cohesin's recruitment to sequences 20 kb or more away. In addition to Scc2/4, the unstable association of transition state complexes with core centromeres requires Scc1's association with Smc1 and Smc3 NBDs, ATP-driven NBD engagement, cohesin's Scc3 subunit, and its hinge domain. CONCLUSION: We propose that cohesin's association with chromosomes is driven by two key events. NBD engagement driven by ATP binding produces an unstable association with specific loading sites like core centromeres, whereas subsequent ATP hydrolysis triggers DNA entrapment, which permits translocation along chromatin fibers.