Separase is a protease that triggers chromosome segregation at anaphase onset by cleaving cohesin, the chromosomal protein complex responsible for sister chromatid cohesion. After anaphase, cells exit from mitosis; that is, they complete downregulation of cyclin-dependent kinase activity, undergo cytokinesis and enter G1 of the next cell cycle. Here we show that separase activation at the onset of anaphase is sufficient to promote release from the nucleolus and activation of the budding yeast phosphatase, Cdc14, a key step in mitotic exit. The ability of separase to activate Cdc14 is independent of its protease function but may involve promoting phosphorylation of the Cdc14 inhibitor Net1. This novel separase function is coregulated with its proteolytic activity by the separase inhibitor securin. This helps to explain the coupling of anaphase and mitotic exit--after securin degradation at anaphase onset, separase cleaves cohesin to trigger chromosome segregation and concurrently uses a non-proteolytic mechanism to initiate mitotic exit.