SLX4, disabled in the Fanconi anemia group P, is a scaffolding protein that coordinates the action of structure-specific endonucleases and other proteins involved in the replication-coupled repair of DNA interstrand cross-links. Here, we show that SLX4 dimerization and SUMO-SIM interactions drive the assembly of SLX4 membraneless compartments in the nucleus called condensates. Super-resolution microscopy reveals that SLX4 forms chromatin-bound clusters of nanocondensates. We report that SLX4 compartmentalizes the SUMO-RNF4 signaling pathway. SENP6 and RNF4 regulate the assembly and disassembly of SLX4 condensates, respectively. SLX4 condensation per se triggers the selective modification of proteins by SUMO and ubiquitin. Specifically, SLX4 condensation induces ubiquitylation and chromatin extraction of topoisomerase 1 DNA-protein cross-links. SLX4 condensation also induces the nucleolytic degradation of newly replicated DNA. We propose that the compartmentalization of proteins by SLX4 through site-specific interactions ensures the spatiotemporal control of protein modifications and nucleolytic reactions during DNA repair.