Dynamins are an essential superfamily of mechanoenzymes that remodel membranes and often contain a “variable domain” important for regulation. For the mitochondrial fission dynamin, dynamin‐related protein 1, a regulatory role for the variable domain is demonstrated by gain‐ and loss‐of‐function mutations, yet the basis for this is unclear. Here, the isolated variable domain is shown to be intrinsically disordered and undergo a cooperative transition in the stabilizing osmolyte trimethylamine N‐oxide. However, the osmolyte‐induced state is not folded and surprisingly appears as a condensed state. Other co‐solutes including known molecular crowder Ficoll PM 70, also induce a condensed state. Fluorescence recovery after photobleaching experiments reveal this state to be liquid‐like indicating the variable domain undergoes a liquid–liquid phase separation under crowding conditions. These crowding conditions also enhance binding to cardiolipin, a mitochondrial lipid, which appears to promote phase separation. Since dynamin‐related protein 1 is found assembled into discrete punctate structures on the mitochondrial surface, the inference from the present work is that these structures might arise from a condensed state involving the variable domain that may enable rapid tuning of mechanoenzyme assembly necessary for fission.This article is protected by copyright. All rights reserved.