In this paper, we study the reconfiguration capability in ATM networks and its ability to reduce ATM cell losses. Digital cross-connect systems have been used in traditional reconfigurable networks to concatenate channels to avoid store- and-forward delays. We propose an implementation of the reconfiguration capability in ATM networks that restricts the transmission of cells of an O-D pair to particular channels in each physical link in a simple path from origin to destination. With this proposed implementation, digital cross-connect systems are not needed. We formulate the problem of jointly determining logical networks and the routing assignments on the logical network of a reconfigurable ATM network as a nonlinear mixed integer programming problem. We prove that the joint problem with the integrality constraints relaxed can be simplified to a convex programming problem. This provides a method to compute a lower bound on the minimum cell losses for the original problem. An algorithm is developed to solve the nonlinear mixed integer programming problem. In the computational experiments, the proposed algorithm determined a good feasible solution in a few minutes of CPU time on SUN SPARCsystem 400. In the experiments, the reconfiguration capability decreased the total cell losses by up to 80%. Problem parameters that affect the effectiveness of the reconfiguration capability in reducing ATM cell losses are identified.