How do cells sense and respond to stressful environmental changes? In eukaryotic cells, stress triggers synthesis of specific molecular chaperones and the simultaneous condensation of many proteins and RNA, in certain cases by phase separation, into macromolecular assemblies such as stress granules. This work shows a connection between these two long-observed phenomena: phase-separation of a stress granule protein, poly(A)-binding protein (Pab1 in S. cerevisiae), regulates translation of mRNAs encoding molecular chaperones during stress. First, we screen the set of proteins that assemble into stress-induced structures by sedimentation. Next we focus on a particular marker for these assemblies: Pab1. We find that Pab1 autonomously undergoes phase separation in response to elevated temperature and acidification. Phase separation is tuned by a low-complexity domain. We find that poly(A)-binding protein binds to A-rich regions in the 5’ untranslated region (5’ UTR) of mRNA encoding multiple heat-induced chaperones. In response to heat shock, poly(A)-binding protein phase-separates and releases these RNAs. We show that poly(A)-binding protein represses translation when bound to the 5’ UTR of mRNA, whereas phase-separated Pab1 neither binds nor represses translation. The induced chaperones, once translated, disperse poly(A)-binding protein back into functional monomers which rebind the heat-induced mRNAs, repressing translation. Together, these results reveal an autoregulatory mechanism wherein stress-triggered phase separation of Pab1 facilitates high level translation of stress-induced chaperones, whose capacity to disperse phase-separated Pab1 leads to the attenuation of their translation after sufficient chaperones have been produced. This mechanism connects direct environmental sensing by phase separation to the adaptive cellular stress response.