Elastin-like polypeptides (ELPs) are protein polymers that reversibly phase separate in response to increased temperature, pressure, concentration, ionic strength, and molecular weight. If it were possible to engineer their phase separation to respond to specific molecular substrates, ELP fusion proteins might be engineered as biosensors, smart biomaterials, diagnostic imaging agents, and targeted therapies. What has been lacking is a strategy to design ELPs to respond to specific substrates. To address this deficiency, we report that ELP fusion proteins phase separate in response to chemical inducers of dimerization (CID). The rationale is that ELP phase separation depends on molecular weight, concentration, and local hydrophobicity; therefore, processes that affect these properties, including noncovalent dimerization, can be tuned to produce isothermal phase separation. To test this hypothesis, constructs were evaluated consisting of an immunophilin: human FK-506 binding protein 12 (FKBP) attached to an ELP. Under stoichiometric binding of a CID, the fusion protein homodimerizes and triggers phase separation. This dimerization is reversible upon saturation with excess CID or competitive binding of a small lipophilic macrolide to FKBP. By modulating the ELP molecular weight, phase separation was tuned for isothermal response to CID at physiological ionic strength and temperature (37 °C). To interpret the relationship between transition temperature and equilibrium binding constants, an empirical mathematical model was employed. To the best of our knowledge, this report is the first demonstration of reversible ELP switching in response to controlled dimerization. Due to its simplicity, this strategy may be useful to design ELP fusion proteins that respond to specific dimeric biological entities.