Cohesins establish sister chromatid cohesion during S phase and are removed when cohesin Scc1 is cleaved by separase at anaphase onset. During this process, cohesin Smc3 undergoes a cycle of acetylation: Smc3 acetylation by Eco1 in S phase stabilizes cohesin association with chromosomes, and its deacetylation by Hos1 in anaphase allows re-use of Smc3 in the next cell cycle. Here we find that Smc3 deacetylation by Hos1 has a more immediate effect in the early anaphase of budding yeast. Hos1 depletion significantly delayed sister chromatid separation and segregation. Smc3 deacetylation facilitated removal of cohesins from chromosomes without changing Scc1 cleavage efficiency, promoting dissolution of cohesion. This action is probably due to disengagement of Smc1-Smc3 heads prompted by de-repression of their ATPase activity. We suggest Scc1 cleavage per se is insufficient for efficient dissolution of cohesion in early anaphase; subsequent Smc3 deacetylation, triggered by Scc1 cleavage, is also required.