TDP-43 is the hallmark protein of several neurodegenerative diseases, including Amyotrophic Lateral Sclerosis (ALS). This RNA-binding protein can form membrane-less condensates through liquid-liquid phase separation (LLPS). This biophysical process is considered to contribute to the regulation of TDP-43 functions but the precise mechanisms governing TDP-43 LLPS and its implications in homeostasis as well as pathology remain incompletely understood.In this study, we aimed to elucidate the influence of RNA-binding on TDP-43 dynamics and localization in vivo. By applying confocal imaging workflows in zebrafish, we present the first in-depth characterization of human TDP-43 LLPS in living neurons. Condensation, localization and aggregation characteristics of RNA-binding deficient variants were compared to wild-type TDP-43.Our analyses revealed alterations in cellular compartmentalization between WT and RNA-binding deficient TDP-43. Specifically, mutated TDP-43 showed a higher nuclear localization compared to wild-type TDP-43 as well as changes in cytoplasmic aggregation propensities. Fluorescence recovery after photobleaching assays demonstrated a significantly altered molecular exchange in and out of the condensates for RNA-binding deficient variants. Single-molecule tracking revealed an altered molecular kinetics when TDP-43 is no longer able to bind RNA.Overall, our study sheds light on the important interplay between RNA-binding and phase separation dynamics in a living organism. Dysregulation of LLPS may not only affect physiological regulation of TDP-43 in the nucleus (e.g. splicing suppression) but also beat the start of the transition of physiological condensates into pathological aggregates. Understanding the molecular drivers of this fundamental process is critical to gain insights into the mechanisms driving TDP-43-associated neurodegeneration.