Osteosarcoma is a highly aggressive cancer and lacks effective therapeutic targets. We found that L3MBTL2 acts as a tumor suppressor by transcriptionally repressing IFIT2 in osteosarcoma. L3MBTL2 recruits the components of Polycomb repressive complex 1.6 to form condensates via both Pho-binding pockets and polybasic regions within carboxyl-terminal intrinsically disordered regions; the L3MBTL2-induced condensates are required for its tumor suppression. Multi-monoubiquitination of L3MBTL2 by UBE2O results in its proteasomal degradation, and the UBE2O/L3MBTL2 axis was crucial for osteosarcoma growth. There is a reverse correlation between L3MBTL2 and UBE2O in osteosarcoma tissues, and higher UBE2O and lower L3MBTL2 are associated with poorer prognosis in osteosarcoma. Pharmacological blockage of UBE2O by arsenic trioxide can enhance L3MBTL2-induced condensates and consequently suppress osteosarcoma growth. Our findings unveil a crucial biological function of L3MBTL2-induced condensates in mediating tumor suppression, proposing the UBE2O-L3MBTL2 axis as a potential cancer therapeutic target in osteosarcoma.