Herpes simplex virus type I (HSV-1) infection leads to RNA polymerase II (RNAPII) degradation and host transcription shutdown. We show that ICP22 defines the virus-induced chaperone-enriched (VICE) domain through liquid-liquid phase separation. Condensate-disrupting point mutations of ICP22 increase ubiquitin modification of RNAPII Ser-2P; reduce its level and occupancy on viral genes; impair viral gene expression, particularly late genes; and severely reduce viral titers. When proteasome activity is blocked, ubiquitinated RNAPII Ser-2P and the viral UL36 begin to accumulate in the ICP22 condensates. The ubiquitin-specific protease (USP) deubiquitinase domain of UL36 interacts with and erases ubiquitin modification from RNAPII Ser-2P, protecting it from degradation in infected cells. A virus carrying a catalytic mutant of the UL36 USP diminishes cellular RNAPII Ser-2P levels, viral transcription, and growth. Thus, ICP22 condensates are processing centers where RNAPII Ser-2P is recruited to be deubiquitinated to ensure viral transcription when host transcription is disrupted following infection.