In the eukaryotic nucleus, heterochromatin forms highly condensed, visible foci known as heterochromatin foci (HF). These HF are enriched with linker histone H1, a key player in heterochromatin condensation and silencing. However, it is unknown how H1 aggregates HF and condenses heterochromatin. In this study, we established that H1 facilitates heterochromatin condensation by enhancing inter- and intrachromosomal interactions between and within heterochromatic regions of the Arabidopsis (Arabidopsis thaliana) genome. We demonstrated that H1 drives HF formation via phase separation, which requires its C-terminal intrinsically disordered region (C-IDR). A truncated H1 lacking the C-IDR fails to form foci or recover HF in the h1 mutant background, whereas C-IDR with a short stretch of the globular domain (18 out of 71 amino acids) is sufficient to rescue both defects. In addition, C-IDR is essential for H1's roles in regulating nucleosome repeat length and DNA methylation in Arabidopsis, indicating that phase separation capability is required for chromatin functions of H1. Our data suggest that bacterial H1-like proteins, which have been shown to condense DNA, are intrinsically disordered and capable of mediating phase separation. Therefore, we propose that phase separation mediated by H1 or H1-like proteins may represent an ancient mechanism for condensing chromatin and DNA.