The nucleocapsid (N) protein of coronaviruses serves two major functions: compaction of the RNA genome in the virion and regulation of viral gene transcription in the infected cell . The N protein contains two globular RNA-binding domains surrounded by regions of intrinsic disorder . Phosphorylation of the central disordered region is required for normal viral genome transcription , which occurs in a cytoplasmic structure called the replication transcription complex (RTC) . It is not known how phosphorylation controls N protein function. Here we show that the N protein of SARS-CoV-2, together with viral RNA, forms biomolecular condensates . Unmodified N protein forms partially ordered gel-like structures that depend on multivalent RNA-protein and protein-protein interactions. Phosphorylation reduces a subset of these interactions, generating a more liquid-like droplet. We speculate that distinct oligomeric states support the two functions of the N protein: unmodified protein forms a structured oligomer that is suited for nucleocapsid assembly, and phosphorylated protein forms a liquid-like compartment for viral genome processing. Inhibitors of N protein phosphorylation could therefore serve as antiviral therapy.