The eukaryotic nucleus is both spatially and functionally partitioned. This organization contributes to the maintenance, expression, and transmission of genetic information. Though our ability to probe the physical structure of the genome within the nucleus has improved substantially in recent years, relatively little is known about the factors that regulate its organization or the mechanisms through which specific organizational states are achieved. Here, we show that Drosophila melanogaster Condensin II induces axial compaction of interphase chromosomes, globally disrupts interchromosomal interactions, and promotes the dispersal of peri-centric heterochromatin. These Condensin II activities compartmentalize the nucleus into discrete chromosome territories and indicate commonalities in the mechanisms that regulate the spatial structure of the genome during mitosis and interphase.