Sirtuin-7 (Sirt7) is a nuclear NAD+-dependent deacetylase with a broad spectrum of biological functions. Sirt7 overexpression is linked to several pathological states and enhances anticancer drug resistance, making the enzyme a promising target for the development of novel therapeutics. Despite a plethora of reported in vivo functions, the biochemical characterization of recombinant Sirt7 remains inadequate for the development of novel drug candidates. Here, we conduct an extensive biochemical analysis of Sirt7 using newly developed binding and kinetic assays to reveal that the enzyme preferentially interacts with and is activated by nucleosomes. Sirt7 activation by nucleic acids alone is effective toward long-chain acylated hydrophobic substrates, while only nucleosome binding leads to 105-fold activation of the deacetylase activity. Using endogenous chromatin and recombinant acetylated nucleosomes, we reveal that Sirt7 is one of the most efficient deacetylases in the sirtuin family and that its catalytic activity is limited by the rate of dissociation from deacetylated nucleosomes.