Most of the world’s biodiversity lives in cold (-2° to 4°C) and hypersaline environments. To understand how cells adapt to such conditions, we isolated two key components of the transcription machinery from fungal species that live in extreme polar environments: the Ess1 prolyl isomerase and its target, the carboxy-terminal domain (CTD) of RNA polymerase II. Polar Ess1 enzymes are conserved and functional in the model yeast, Saccharomyces cerevisiae. By contrast, polar CTDs diverge from the consensus (YSPTSPS)26 and are not fully functional in S. cerevisiae. These CTDs retain the critical Ess1 Ser-Pro target motifs, but substitutions at Y1, T4, and S7 profoundly affected their ability to undergo phase separation in vitro and localize in vivo. We propose that environmentally tuned phase separation by the CTD and other intrinsically disordered regions plays an adaptive role in cold tolerance by concentrating enzymes and substrates to overcome energetic barriers to metabolic activity.