Lipid homeostasis is essential for normal cellular functions and dysregulation of lipid metabolism is highly correlated with human diseases including neurodegenerative diseases. In the ubiquitin-dependent autophagic degradation pathway, Troyer syndrome-related protein Spartin activates and recruits HECT-type E3 Itch to lipid droplets (LDs) to regulate their turnover. In this study, we find that Spartin promotes the formation of Itch condensates independent of LDs. Spartin activates Itch through its multiple PPAY-motif platform generated by self-oligomerization, which targets the WW12 domains of Itch and releases the autoinhibition of the ligase. Spartin-induced activation and subsequent autoubiquitination of Itch lead to liquid-liquid phase separation (LLPS) of the poly-, but not oligo-, ubiquitinated Itch together with Spartin and E2 both in vitro and in living cells. LLPS-mediated condensation of the reaction components further accelerates the generation of polyubiquitin chains, thus forming a positive feedback loop. Such Itch-Spartin condensates actively promote the autophagy-dependent turnover of LDs. Moreover, we show that the catalytic HECT domain of Itch is sufficient to interact and phase separate with poly-, but not oligo-ubiquitin chains. HECT domains from other HECT E3 ligases also exhibit LLPS-mediated the promotion of ligase activity. Therefore, LLPS and ubiquitination are mutually interdependent and LLPS promotes the ligase activity of the HECT family E3 ligases.