Germ granules are biomolecular condensates that form in germ cells of all/most animals, where they regulate mRNA expression to promote germ cell function and totipotency. In the adult Caenorhabditis elegans germ cell, these granules are composed of at least four distinct sub-compartments, one of which is the Z granule. To better understand the role of the Z granule in germ cell biology, we conducted a genetic screen for genes specifically required for Z granule assembly or morphology. Here, we show that zsp-1, which encodes a low-complexity/polyampholyte-domain protein, is required for Z granule homeostasis. ZSP-1 localizes to the outer surface of Z granules. In the absence of ZSP-1, Z granules swell to an abnormal size, fail to segregate with germline blastomeres during development, and lose their liquid-like character. Finally, ZSP-1 promotes piRNA-and siRNA-directed gene regulation and germline immortality. Our data suggest that Z granules coordinate small RNA-based gene regulation to promote germ cell function and that ZSP-1 helps/is need to maintain Z granule morphology and liquidity.