The duality of liquid-liquid phase separation (LLPS) of cellular components into membraneless organelles defines the nucleation of both normal and disease processes including stress granule (SG) assembly. From mounting evidence of LLPS utility by viruses, we discover that HIV-1 nucleocapsid (NC) protein condenses into zinc-finger (ZnF)-dependent LLPSs that are dynamically influenced by cytosolic factors. ZnF-dependent and Zinc (Zn2+)-chelation-sensitive NC-LLPS are formed in live cells. NC-Zn2+ ejection reverses the HIV-1 blockade on SG assembly, inhibits NC-SG assembly, disrupts NC/Gag-genomic RNA (vRNA) ribonucleoprotein complexes, and causes nuclear sequestration of NC and the vRNA, inhibiting Gag expression and virus release. NC ZnF mutagenesis eliminates the HIV-1 blockade of SG assembly and repositions vRNA to SGs. We find that NC-mediated, Zn2+-coordinated phase separation is conserved among diverse retrovirus subfamilies, illustrating that this exquisitely evolved Zn2+-dependent feature of virus replication represents a critical target for pan-antiretroviral therapies.