Tau protein in vitro can undergo liquid–liquid phase separation (LLPS); however, observations of this phase transition in living cells are limited. To investigate protein state transitions in living cells, we attached Cry2 to Tau and studied the contribution of each domain that drives the Tau cluster in living cells. Surprisingly, the proline-rich domain (PRD), not the microtubule binding domain (MTBD), drives LLPS and does so under the control of its phosphorylation state. Readily observable, PRD-derived cytoplasmic condensates underwent fusion and fluorescence recovery after photobleaching consistent with the PRD LLPS in vitro. Simulations demonstrated that the charge properties of the PRD predicted phase separation. Tau PRD formed heterotypic condensates with EB1, a regulator of plus-end microtubule dynamic instability. The specific domain properties of the MTBD and PRD serve distinct but mutually complementary roles that use LLPS in a cellular context to implement emergent functionalities that scale their relationship from binding α-beta tubulin heterodimers to the larger proportions of microtubules.