Loss of TDP-43 protein homeostasis and dysfunction, in particular TDP-43 aggregation, are tied to amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD). TDP-43 is an RNA binding protein tightly controlling its own expression levels through a negative feedback loop, involving TDP-43 recruitment to the 3′ untranslated region of its own transcript. Aberrant TDP-43 expression caused by autoregulation defects are linked to TDP-43 pathology. Therefore, interactions between TDP-43 and its own transcript are crucial to prevent TDP-43 aggregation and loss of function. However, the mechanisms that mediate this interaction remain ill-defined. We find that a central RNA sequence in the 3′ UTR, which mediates TDP-43 autoregulation, increases the liquid properties of TDP-43 phase separation. Furthermore, binding to this RNA sequence induces TDP-43 condensation in human cell lysates, suggesting that this interaction promotes TDP-43 self-assembly into dynamic ribonucleoprotein granules. In agreement with these findings, our experiments show that TDP-43 oligomerization and phase separation, mediated by the amino and carboxy-terminal domains, respectively, are essential for TDP-43 autoregulation. According to our additional observations, CLIP34-associated phase separation and autoregulation may be efficiently controlled by phosphorylation of the N-terminal domain. Importantly, we find that specific ALS-associated TDP-43 mutations, mainly M337V, and a shortened TDP-43 isoform recently tied to motor neuron toxicity in ALS, disrupt the liquid properties of TDP-43-RNA condensates as well as autoregulatory function. In addition, we find that M337V decreases the cellular clearance of TDP-43 and other RNA binding proteins associated with ALS/FTD. These observations suggest that loss of liquid properties in M337V condensates strongly affects protein homeostasis. Together, this work provides evidence for the central role of TDP-43 oligomerization and liquid-liquid phase separation linked to RNA binding in autoregulation. These mechanisms may be impaired by TDP-43 disease variants and controlled by specific cellular signaling.