Tau, a protein involved in Alzheimer's disease and other tauopathies, can undergo liquid-liquid phase separation in vitro to form dynamic liquid droplets. Disease-associated modifications like the AT8 phospho-epitope and the P301L mutation enhance tau droplet formation and reduce droplet dynamics. Extended phase separation promotes the adoption of toxic tau conformations and oligomerization without filament formation, suggesting phase separation may facilitate pathogenic tau formation. The P301L mutation leads to the greatest oligomer formation following phase separation.