Crossover recombination and the formation of chiasmata normally ensure the proper segregation of homologous chromosomes during the first meiotic division. zhp-3, the Caenorhabditis elegans ortholog of the budding yeast ZIP3 gene, is required for crossover recombination. We show that ZHP-3 protein localization is highly dynamic. At a key transition point in meiotic prophase, the protein shifts from along the length of the synaptonemal complex (SC) to an asymmetric localization on the SC and eventually becomes restricted to foci that mark crossover recombination events. A zhp-3::gfp transgene partially complements a null mutation and reveals a separation of function; although the fusion protein can promote nearly wild-type levels of recombination, aneuploidy among the progeny is high, indicating defects in meiotic chromosome segregation. The structure of bivalents is perturbed in this mutant, suggesting that the chromosome segregation defect results from an inability to properly remodel chromosomes in response to crossovers. smo-1 mutants exhibit phenotypes similar to zhp-3::gfp mutants at higher temperatures, and smo-1; zhp-3::gfp double mutants exhibit more severe meiotic defects than either single mutant, consistent with a role for SUMO in the process of SC disassembly and bivalent differentiation. We propose that coordination of crossover recombination with SC disassembly and bivalent formation reflects a conserved role of Zip3/ZHP-3 in coupling recombination with SC morphogenesis.