Human cytomegalovirus (HCMV) replicates its DNA genome in specialized replication compartments (RCs) in the host cell nucleus. These membrane-less organelles originate as spherical structures and grow in size over time. However, the mechanism of RC biogenesis has remained understudied. Using live-cell imaging and photo-oligomerization, we show that a central component of RCs, the UL112-113 proteins, undergo liquid-liquid phase separation (LLPS) to form RCs in the nucleus. We show that the self-interacting domain and large intrinsically disordered regions of UL112-113 are required for LLPS. Importantly, viral DNA induces local clustering of these proteins and lowers the threshold for phase separation. The formation of phase-separated compartments around viral genomes is necessary to recruit the viral DNA polymerase for viral genome replication. Thus, HCMV uses its UL112-113 proteins to generate RCs around viral genomes by LLPS to ensure the formation of a pro-replicative environment.