Structural maintenance of chromosomes (SMC) complexes organize chromosomes ubiquitously, thereby contributing to their faithful segregation. We demonstrate that under conditions of increased chromosome occupancy of the Escherichia coli SMC complex, MukBEF, the chromosome is organized as a series of loops around a thin (<130 nm) MukBEF axial core, whose length is ∼1,100 times shorter than the chromosomal DNA. The linear order of chromosomal loci is maintained in the axial cores, whose formation requires MukBEF ATP hydrolysis. Axial core structure in non-replicating chromosomes is predominantly linear (1 μm) but becomes circular (1.5 μm) in the absence of MatP because of its failure to displace MukBEF from the 800 kbp replication termination region (ter). Displacement of MukBEF from ter by MatP in wild-type cells directs MukBEF colocalization with the replication origin. We conclude that MukBEF individualizes and compacts the chromosome lengthwise, demonstrating a chromosome organization mechanism similar to condensin in mitotic chromosome formation.