Human Microrchidia 4 (MORC4) is associated with acute and chronic pancreatitis, inflammatory disorders and cancer but it remains largely uncharacterized. Here, we describe the structure-function relationship of MORC4 and define the molecular mechanism for MORC4 activation. Enzymatic and binding assays reveal that MORC4 has ATPase activity, which is dependent on DNA-binding functions of both the ATPase domain and CW domain of MORC4. The crystal structure of the ATPaseCW cassette of MORC4 and mutagenesis studies show that the DNA-binding site and the histone/ATPase binding site of CW are located on the opposite sides of the domain. The ATPase and CW domains cooperate in binding of MORC4 to the nucleosome core particle (NCP), enhancing the DNA wrapping around the histone core and impeding binding of DNA-associated proteins, such as transcription factors, to the NCP. In cells, MORC4 mediates formation of nuclear bodies in the nucleus and has a role in the progression of S-phase of the cell cycle, and both these functions require CW and catalytic activity of MORC4. Our findings highlight the mechanism for MORC4 activation, which is distinctly different from the mechanisms of action observed in other MORC family members.