Increasing evidence implicates cohesin in the control of gene expression. Here we report the first analysis of cohesin-dependent gene regulation in fission yeast. Global expression profiling of the mis4-367 cohesin loader mutant identified a small number of upregulated and downregulated genes within subtelomeric domains (SD). These 20- to 40-kb regions between chromosome arm euchromatin and telomere-proximal heterochromatin are characterized by a combination of euchromatin (methylated lysine 4 on histone H3/methylated Tysine 9 on histone H3 [H3K4me]) and heterochromatin (H3K9me) marks. We focused our analysis on the chromosome 1 right SD, which contains several upregulated genes and is bordered on the telomere-distal side by a pair of downregulated genes. We find that the expression changes in the SD also occur in a mutant of the cohesin core component Rad21. Remarkably, mutation of Rad21 results in the depletion of Swi6 binding in the SD. In fact, the Rad21 mutation phenocopied Swi6 loss of function: both mutations led to reduced cohesin binding, reduced H3K9me, and similar gene expression changes in the SD. In particular, expression of the gene pair bordering the SD was dependent both on cohesin and on Swi6. Our data indicate that cohesin participates in the setup of a subtelomeric heterochromatin domain and controls the expression of the genes residing in that domain.