Here, we demonstrate that Pds5 proteins are essential for cohesion establishment by allowing Smc3 acetylation by the cohesin acetyl transferases (CoATs) Esco1/2 and binding of Sororin. While both proteins contribute to telomere and arm cohesion, Pds5B is specifically required for centromeric cohesion. Furthermore, reduced accumulation of Aurora B at the inner centromere region in cells lacking Pds5B impairs its error correction function, promoting chromosome mis-segregation and aneuploidy. Our work supports a model in which the composition and function of cohesin complexes differs between different chromosomal regions.