Phase separation creates two distinct liquid phases from a single mixed liquid phase, like oil droplets separating from water. Considerable attention has focused on how the products of phase separation-the resulting condensates-might act as biological compartments, bioreactors, filters, and membraneless organelles in cells. Here, we expand this perspective, reviewing recent results showing how cells instead use the process of phase separation to sense intracellular and extracellular changes. We review case studies in phase separation-based sensing and discuss key features, such as extraordinary sensitivity, which make the process of phase separation ideally suited to meet a range of sensory challenges cells encounter. This article is part of the thematic series, Phase separation of RNA-binding proteins in physiology and disease. The authors declare that they have no conflicts of interest with the contents of this article.