The nucleocapsid (N) protein of coronaviruses serves two major functions: compaction of the RNA genome in the virion and regulation of viral gene transcription. It is not clear how the N protein mediates such distinct functions. The N protein contains two RNA-binding domains surrounded by regions of intrinsic disorder. Phosphorylation of the central disordered SR-rich region promotes the protein’s transcriptional function, but the underlying mechanism is not known. 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 condensates based on multivalent RNA-protein and protein-protein inter- actions. Phosphorylation reduces these interactions, generating a more liquid-like droplet. We propose 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.