Heat-shock transcription factor 1 (HSF1) orchestrates the fast and vast cellular response to heat shock through increased expression of heat-shock proteins. However, how HSF1 rapidly and reversibly regulates transcriptional reprogramming remains poorly defined. Here by combining super-resolution imaging, in vitro reconstitution and high-throughput sequencing, we reveal that HSF1 forms small nuclear condensates via liquid-liquid phase separation at heat-shock-protein gene loci and enriches multiple transcription apparatuses through co-phase separation to promote the transcription of target genes. Furthermore, the phase-separation capability of HSF1 is fine-tuned through phosphorylation at specific sites within the regulatory domain. Last, we discovered that HSP70 disperses HSF1 condensates to attenuate transcription following the cessation of heat shock and further prevents the gel-like phase transition of HSF1 under extended heat-shock stress. Our work reveals an inducible and reversible phase-separation feedback mechanism for dynamic regulation of HSF1 activity to drive the transcriptional response and maintain protein homeostasis during acute stress.