The hypomethylation of fused in sarcoma (FUS) in frontotemporal lobar degeneration promotes the formation of irreversible condensates of FUS. However, the mechanisms by which these hypomethylated FUS condensates cause neuronal dysfunction are unknown. Here we report that expression of FUS constructs mimicking hypomethylated FUS causes aberrant dendritic FUS condensates in CA1 neurons. These hypomethylated FUS condensates exhibit spontaneous, and activity induced movement within the dendrite. They impair excitatory synaptic transmission, postsynaptic density-95 expression, and dendritic spine plasticity. These neurophysiological defects are dependent upon both the dendritic localisation of the condensates, and their ability to undergo liquid-liquid phase separation. These results indicate that the irreversible liquid-liquid phase separation is a key component of hypomethylated FUS pathophysiology in sporadic FTLD, and this can cause synapse dysfunction in sporadic FTLD.