Cells organize biochemical processes into biological condensates. P-bodies are cytoplasmic condensates that are enriched in enzymes important for mRNA degradation and have been identified as sites of both storage and decay. How these opposing outcomes can be achieved in condensates remains unresolved. mRNA decapping immediately precedes degradation, and the Dcp1/Dcp2 decapping complex is enriched in P-bodies. Here, we show that Dcp1/Dcp2 activity is modulated in condensates and depends on the interactions promoting phase separation. We find that Dcp1/Dcp2 phase separation stabilizes an inactive conformation in Dcp2 to inhibit decapping. The activator Edc3 causes a conformational change in Dcp2 and rewires the protein-protein interactions to stimulate decapping in condensates. Disruption of the inactive conformation dysregulates decapping in condensates. Our results indicate that the regulation of enzymatic activity in condensates relies on a coupling across length scales ranging from microns to ångstroms. We propose that this regulatory mechanism may control the functional state of P-bodies and related phase-separated compartments.