Cytokinetic abscission, the last step of cell division, is regulated by the ESCRT machinery. In response to mitotic errors, ESCRT proteins, namely, ALIX, CHMP4B, and CHMP4C, accumulate in the cytosolic compartments termed "abscission checkpoint bodies" (ACBs) to delay abscission and prevent tumorigenesis. ALIX contributes to the biogenesis and stability of ACBs via an unknown mechanism. We show that ALIX phase separates into nondynamic condensates in vitro and in vivo, mediated by the amyloidogenic portion of its proline-rich domain. ALIX condensates confined CHMP4 paralogs in vitro. These condensates dissolved and reformed upon reversible tyrosine phosphorylation of ALIX, mediated by Src kinase and PTP1B, and sequestration of CHMP4C altered their Src-mediated dissolution. NMR analysis revealed how ALIX triggers the activation of CHMP4 proteins, which is required for successful abscission. These results implicate ALIX's phase separation in the modulation of ACBs. This study also highlights how posttranslational modifications can control protein phase separation.