Structural maintenance of chromosomes (SMC) complexes are central organizers of chromatin architecture throughout the cell cycle. The SMC family member condensin is best known for establishing long-range chromatin interactions in mitosis. These compact chromatin and create mechanically stable chromosomes. How condensin contributes to chromatin organization in interphase is less well understood. Here, we use efficient conditional depletion of fission yeast condensin to determine its contribution to interphase chromatin organization. We deplete condensin in G2-arrested cells to preempt confounding effects from cell cycle progression without condensin. Genome-wide chromatin interaction mapping, using Hi-C, reveals condensin-mediated chromatin interactions in interphase that are qualitatively similar to those observed in mitosis, but quantitatively far less prevalent. Despite their low abundance, chromatin mobility tracking shows that condensin markedly confines interphase chromatin movements. Without condensin, chromatin behaves as an unconstrained Rouse polymer with excluded volume, while condensin constrains its mobility. Unexpectedly, we find that condensin is required during interphase to prevent ongoing transcription from eliciting a DNA damage response. In addition to establishing mitotic chromosome architecture, condensin-mediated long-range chromatin interactions contribute to shaping chromatin organization in interphase. The resulting structure confines chromatin mobility and protects the genome from transcription-induced DNA damage. This adds to the important roles of condensin in maintaining chromosome stability.