Correct chromosome segregation is essential in order to prevent aneuploidy. To segregate sister chromatids equally to daughter cells, the sisters must attach to microtubules emanating from opposite spindle poles. This so-called biorientation manifests itself by increased tension and conformational changes across kinetochores and pericentric chromatin. Tensionless attachments are dissolved by the activity of the conserved mitotic kinase Aurora B/Ipl1, thereby promoting the formation of correctly attached chromosomes. Recruitment of the conserved centromeric protein shugoshin is essential for biorientation, but its exact role has been enigmatic. Here, we identify a novel function of shugoshin (Sgo1 in budding yeast) that together with the protein phosphatase PP2A-Rts1 ensures localization of condensin to the centromeric chromatin in yeast Saccharomyces cerevisiae. Failure to recruit condensin results in an abnormal conformation of the pericentric region and impairs the correction of tensionless chromosome attachments. Moreover, we found that shugoshin is required for maintaining Aurora B/Ipl1 localization on kinetochores during metaphase. Thus, shugoshin has a dual function in promoting biorientation in budding yeast: first, by its ability to facilitate condensin recruitment it modulates the conformation of the pericentric chromatin. Second, shugoshin contributes to the maintenance of Aurora B/Ipl1 at the kinetochore during gradual establishment of bipolarity in budding yeast mitosis. Our findings identify shugoshin as a versatile molecular adaptor that governs chromosome biorientation.