Interferon-gamma (IFN-gamma)-mediated adaptive resistance is one major barrier to improving immunotherapy in solid tumors. However, the mechanisms are not completely understood. Here, we report that IFN-gamma promotes nuclear translocation and phase separation of YAP after anti-PD-1 therapy in tumor cells. Hydrophobic interactions of the YAP coiled-coil domain mediate droplet initiation, and weak interactions of the intrinsically disordered region in the C terminus promote droplet formation. YAP partitions with the transcription factor TEAD4, the histone acetyltransferase EP300, and Mediator1 and forms transcriptional hubs for maximizing target gene transcriptions, independent of the canonical STAT1-IRF1 transcription program. Disruption of YAP phase separation reduced tumor growth, enhanced immune response, and sensitized tumor cells to anti-PD-1 therapy. YAP activity is negatively correlated with patient outcome. Our study indicates that YAP mediates the IFN-gamma pro-tumor effect through its nuclear phase separation and suggests that YAP can be used as a predictive biomarker and target of anti-PD-1 combination therapy.