We present the first X-ray study of Collinder 261 (Cr261), which at an age of 7Gyr is one of the oldest open clusters known in the Galaxy. Our observation with the Chandra X-Ray Observatory is aimed at uncovering the close interacting binaries in Cr261, and reaches a limiting X-ray luminosity of L_X_~4x10^29^erg/s (0.3-7keV) for stars in the cluster. We detect 107 sources within the cluster half-mass radius r_h_, and we estimate that among the sources with L_X_>~10^30^erg/s, ~26 are associated with the cluster. We identify a mix of active binaries and candidate active binaries, candidate cataclysmic variables, and stars that have "straggled" from the main locus of Cr261 in the color-magnitude diagram. Based on a deep optical source catalog of the field, we estimate that Cr261 has an approximate mass of 6500M_{sun}_, roughly the same as the old open cluster NGC6791. The X-ray emissivity of Cr261 is similar to that of other old open clusters, supporting the trend that they are more luminous in X-rays per unit mass than old populations of higher (globular clusters) and lower (the local neighborhood) stellar density. This implies that the dynamical destruction of binaries in the densest environments is not solely responsible for the observed differences in X-ray emissivity.