SARS-CoV-2 and its variants, with the Omicron subvariant XBB currently prevailing the global infections, continue to pose threats on public health worldwide. This non-segmented positive-stranded RNA virus encodes the multi-functional nucleocapsid protein (N) that plays key roles in viral infection, replication, genome packaging and budding. N protein consists of two structural domains, NTD and CTD, and three intrinsically disordered regions (IDRs) including the NIDR, the serine/arginine rich motif (SRIDR), and the CIDR. Previous studies revealed functions of N protein in RNA binding, oligomerization, and liquid–liquid phase separation (LLPS), however, characterizations of individual domains and their dissected contributions to N protein functions remain incomplete. In particular, little is known about N protein assembly that may play essential roles in viral replication and genome packing. Here, we present a modular approach to dissect functional roles of individual domains in SARS-CoV-2 N protein that reveals inhibitory or augmented modulations of protein assembly and LLPS in the presence of viral RNAs. Intriguingly, full-length N protein (NFL) assembles into ring-like architecture whereas the truncated SRIDR-CTD-CIDR(N182-419) promotes filamentous assembly. Moreover, LLPS droplets of NFLand N182-419are significantly enlarged in the presence of viral RNAs, and we observed filamentous structures in the N182-419droplets using correlative light and electron microscopy (CLEM), suggesting that the formation of LLPS droplets may promote higher-order assembly of N protein for transcription, replication and packaging. Together this study expands our understanding of the multiple functions of N protein in SARS-CoV-2.Supplementary InformationThe online version contains supplementary material available at 10.1186/s43556-023-00129-z.