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Liquid-liquid phase separation (LLPS) is a fundamental mechanism for the formation of membrane-less organelles, enabling cells to compartmentalize biochemical processes without membrane boundaries. In viral infections, LLPS is increasingly recognized as a strategy for organizing replication and transcriptional machinery. Here, we report that H5, a DNA-binding protein of vaccinia virus (VACV) could undergo LLPS through its N-terminal intrinsically disordered region (IDR). H5 forms dynamic and reversible condensates in both transfected and vacv infected cells, a property also observed with H5 orthologs from mpox virus and lumpy skin disease virus. Fluorescence recovery after photobleaching (FRAP) assays confirmed the liquid-like behavior of H5 condensates. Using structure-guided mutagenesis and phosphoproteomics, we identified two critical phosphorylation sites within the IDR, S127 and S130, which are essential for the interaction between H5 and DNA. These modifications are mediated redundantly by host proteins and viral B1 kinases. Mutations at these residues inhibit the binding of H5 to DNA, thereby directly or indirectly abolish LLPS formation, and impair viral replication factory assembly, leading to a marked reduction in viral DNA replication and progeny production, without affecting the synthesis of H5 or its subcellular localization. Our findings indicate that these two serine residues of H5 contribute to its interaction with DNA and the formation of LLPS, a process that may help organize viral replication compartments and facilitate interactions with key components of the DNA polymerase complex. This study uncovers a previously uncharacterized mechanism by which the poxvirus H5 protein promotes viral factory assembly and coordinates replication, and identifies a conserved regulatory axis that may serve as a potential therapeutic target across poxvirus species.