CTF7 (chromosome transmission fidelity) gene in budding yeast encodes an essential protein that is required for high-fidelity chromosome transmission and contains regions of identity conserved from yeast to man. ctf7 mutant cells arrested prior to anaphase onset contain separated sister chromatids. Thus, Ctf7p is essential for cohesion. Cohesion is established during S phase and then maintained until mitosis. However, Ctf7p activity is required only during S phase, suggesting that Ctf7p functions in the establishment of cohesion. In addition, ctf7 genetically interacts with DNA metabolism mutations pol30 (PCNA) and ctf18 (an RF-C like protein) and ctf7 temperature sensitivity and chromosome loss are rescued by high levels of POL30. These findings provide the first evidence that links the establishment of sister chromatid cohesion to the DNA replication machinery and suggest that the assembly of cohesion (and possibly condensation) complexes are coupled to PCNA-dependent DNA replication. The analysis of Ctf7p also reveals an important connection between sister chromatid cohesion, spindle integrity and the spindle assembly checkpoint.