Phase separation has emerged as a new key principle of intracellular organization. Phase-separated structures play diverse roles in various biological processes and pathogenesis of protein aggregation diseases. Recent work has revealed crucial functions for phase separation during germline development. Phase separation controls the assembly and segregation of germ granules that determine which embryonic cells become germ cells. Phase separation promotes the formation of the Balbiani body, a structure that stores organelles and RNAs during the prolonged prophase arrest of oocytes. Phase separation also facilitates meiotic recombination that prepares homologous chromosomes for segregation, and drives the formation of a liquid-like spindle domain that promotes spindle assembly in mammalian oocytes. We review how phase separation drives these essential steps during germline development.