Histone variant H2A.Z has a conserved role in genome stability, although it remains unclear how this is mediated. Here we demonstrate that the fission yeast Swr1 ATPase inserts H2A.Z (Pht1) into chromatin and Kat5 acetyltransferase (Mst1) acetylates it. Deletion or an unacetylatable mutation of Pht1 leads to genome instability, primarily caused by chromosome entanglement and breakage at anaphase. This leads to the loss of telomere-proximal markers, though telomere protection and repeat length are unaffected by the absence of Pht1. Strikingly, the chromosome entanglement in pht1Delta anaphase cells can be rescued by forcing chromosome condensation before anaphase onset. We show that the condensin complex, required for the maintenance of anaphase chromosome condensation, prematurely dissociates from chromatin in the absence of Pht1. This and other findings suggest an important role for H2A.Z in the architecture of anaphase chromosomes.