Abstract BACKGROUND Ependymomas continue to be an aggressive brain tumor entity without targeted therapies. The highly recurrent fusion oncoprotein (FO), ZFTA-RELA, is known to be associated with about 70% of supratentorial ependymomas. While recent studies have highlighted that the fusion protein is involved in aberrant DNA binding and subsequent oncogenic gene expression, the precise mechanisms underlying the transcriptional dysregulation remain elusive. METHODS Using super-resolution and lattice-sheet microscopy, we demonstrate that ZFTA-RELA forms dynamic liquid-like nuclear condensates. ZFTA-RELA condensates recruit co-factors like Med1, and Brd4 and are associated with the transcription of ependymoma oncogenes (Notch1 and Ccnd1). We leveraged machine learning models trained on FOs in other cancers to identify critical intrinsically disordered domains (IDRs) within ZFTA-RELA. A series of mutagenesis experiments were conducted to determine IDRs important for condensate formation, transcription, and tumor initiation. We also performed NMR spectroscopy to unravel the protein structure of ZFTA-RELA zinc finger binding domains. RESULTS We demonstrate that transcriptional condensate formation of ZFTA-RELA is an important cellular phenotype that is tightly linked with oncogenic transcription and tumor initiation. Further, we identify key residues within the zinc finger domain of ZFTA that are required for DNA binding of oncogenic target genes and condensate formation. Deletion of the key IDRs within ZFTA-RELA disrupts condensates and abolishes transcriptional activation and tumorigenesis. We also show that condensate formation is an underlying feature found across all other ZFTA-fusion oncoproteins, providing a model to understand how ZFTA FOs drive cancer. CONCLUSION Our studies provide mechanistic insights into the biophysical and structural basis of ZFTA fusion oncoproteins. These findings provide a framework to develop druggable strategies through targeting ZFTA FO zinc finger domains or disruption of oncogenic condensates.