H2A.Z is a highly conserved variant of histone H2A with well-characterized roles in transcriptional regulation. We previously reported that H2A.Z and Mcd1, a subunit of the cohesin complex, regulate the establishment of transcriptional silencing at telomeres in Saccharomyces cerevisiae and that H2A.Z broadly dissociated from chromatin during the anaphase-to-telophase transition, coincident with the dissociation of Mcd1 from chromosomes and dissolution of cohesion. In this study, we show that depletion of H2A.Z causes precocious loss of sister chromatid cohesion in yeast without loss of Mcd1 from chromosomes. H2A.Z is deposited into chromatin by the SWR1 complex and is subject to acetylation of its four N-terminal tail lysine residues by the NuA4 and SAGA histone acetyltransferase complexes. We found that cells compromised for function of the SWR1 complex were defective in cohesion, as were cells expressing a form of H2A.Z not subject to acetylation. Finally, inactivation of H2A.Z in metaphase-blocked cells led immediately to cohesion defects, suggesting a direct role for H2A.Z in the maintenance of sister chromatid cohesion.