Eukaryotic cells must first compact their chromosomes before faithfully segregating them during cell division. Failure to do so can lead to segregation defects with pathological consequences, such as aneuploidy and cancer. Duplicated interphase chromosomes are, therefore, reorganized into tight rods before being separated and directed to the newly forming daughter cells. This vital reorganization of chromatin remains poorly understood. To address the dynamics of mitotic condensation of single chromosomes in intact cells, we developed quantitative assays based on confocal time-lapse microscopy of live mammalian cells stably expressing fluorescently tagged core histones. Surprisingly, maximal compaction was not reached in metaphase, but in late anaphase, after sister chromatid segregation. We show that anaphase compaction proceeds by a mechanism of axial shortening of the chromatid arms from telomere to centromere. Chromatid axial shortening was not affected in condensin-depleted cells, but depended instead on dynamic microtubules and Aurora kinase. Acute perturbation of this compaction resulted in failure to rescue segregation defects and in multilobed daughter nuclei, suggesting functions in chromosome segregation and nuclear architecture.