Sequence-encoded autoinhibition couples mRNA decapping activity to phase separation

Removal of the 5' m⁷G cap by the Dcp1/Dcp2 complex commits mRNAs to degradation, yet the mechanisms regulating decapping remain incompletely understood. Here, we identify residue-level determinants within the extended C-terminus of fission yeast Dcp2 that repress activity. Mutations in conserved inhibitory motifs relieve autoinhibition, enhance RNA binding, and bypass the requirement for the activator Edc3. Strikingly, this activation persists within phase-separated condensates, demonstrating that conformational relief in solution is propagated to the dense phase. We further show that long-range interactions between the intrinsically disordered region of Dcp2 and the catalytic core restrict RNA engagement, providing a mechanistic basis for negative regulation. Together, these findings establish that sequence-encoded elements within the Dcp2 C-terminus control catalytic activity and functional output within biomolecular condensates. More broadly, our results reveal that competing interactions encoded within intrinsically disordered regions of proteins are balanced to allosterically tune enzyme activity, providing a general mechanism by which proteins modulate distinct enzymatic functions within biological condensates.