Dynamins are an essential superfamily of mechanoenzymes that remodel membranes and often contain a "variable domain" (VD) important for regulation. For the mitochondrial fission dynamin, Drp1, a regulatory role for the VD is demonstrated by mutations that can elongate, or fragment, mitochondria. How the VD encodes inhibitory and stimulatory activity is unclear. Here, isolated VD is shown to be intrinsically disordered (ID) yet undergoes a cooperative transition in the stabilizing osmolyte TMAO. However, the TMAO stabilized state is not folded and surprisingly appears as a condensed state. Other co-solutes including known molecular crowder Ficoll PM 70, also induce a condensed state. Fluorescence recovery after photobleaching experiments reveal this state to be liquid-like indicating the VD undergoes a liquid-liquid phase separation under crowding conditions. These crowding conditions also enhance binding to cardiolipin, a mitochondrial lipid, raising the possibility that phase separation may enable rapid tuning of Drp1 assembly necessary for fission.