Cellular and tissue-level edema is a common feature of acute viral infections such as covid-19, and of many hyponatremic hypoosmolar disorders. However, there is little understanding of the effects of cellular edema on antiviral effector mechanisms. We previously discovered that cytoplasmic human MxA, a major antiviral effector of Type I and III interferons against several RNA- and DNA-containing viruses, existed in the cytoplasm in phase-separated membraneless biomolecular condensates of varying sizes and shapes. In this study we investigated how hypoosmolar conditions, mimicking cellular edema, might affect the structure and antiviral function of MxA condensates. Cytoplasmic condensates of both IFN-α-induced endogenous MxA and of exogenously expressed GFP-MxA in human A549 lung and Huh7 hepatoma cells rapidly disassembled within 1-2 min when cells were exposed to hypotonic buffer (~ 40-50 mOsm), and rapidly reassembled into new structures within 1-2 min of shifting of cells to isotonic culture medium (~ 330 mOsm). MxA condensates in cells continuously exposed to culture medium of moderate hypotonicity (in the range one-fourth, one-third or one-half isotonicity; range 90-175 mOsm) first rapidly disassembled within 1-3 min, and then, in most cells, spontaneously reassembled 7-15 min later into new structures. Condensate reassembly, whether induced by isotonic medium or occurring spontaneously under continued moderate hypotonicity, was preceded by crowding of the cytosolic space by large vacuole-like dilations (VLDs) derived from internalized plasma membrane. Remarkably, the antiviral activity of GFP-MxA against vesicular stomatitis virus survived hypoosmolar disassembly. Overall, the data highlight the exquisite sensitivity of MxA condensates to rapid reversible osmoregulation.