The denaturation of DNA is a critical process in biology and has many biotechnological applications. We investigated the compaction of locally denatured DNA by a chemical denaturation agent, dimethyl sulfoxide (DMSO), using magnetic tweezers (MTs), atomic force microscopy (AFM), and dynamic light scattering (DLS). Our results show that DMSO not only is capable of denaturing DNA but also able to compact DNA directly. When the DMSO concentration is above 10%, DNA condensation occurs due to the reduction in the persistence length of DNA and excluded volume interactions. Meanwhile, locally denatured DNA is easily condensed by divalent cations, such as magnesium ions (Mg2+), contrasting with no native DNA condensation by the classical divalent cations. Specifically, the addition of more than 3 mM Mg2+ to a 5% DMSO solution leads to DNA condensation. The critical condensing force (FC) increases from 6.4 to 9.5 pN when the Mg2+ concentration grows from 3 to 10 mM. However, FC decreases gradually with a further increase in Mg2+ concentration. For 3% DMSO solution, above 30 mM Mg2+ is needed to compact DNA and a weaker condensing force was measured. With increasing Mg2+ concentration, the morphology of the DMSO partially denatured DNA complex changes from loosely random coils to a dense network structure, even forming a spherical condensation nucleus, and finally to a partially disintegrated network. These findings show that the elasticity of DNA plays an important role in its denaturation and condensation behavior.