The synapse is polarized and highly compartmentalized on both its pre- and postsynaptic sides. The compartmentalization of synaptic vesicles, as well as vesicle releasing and recycling machineries, allows neurotransmitters to be released with precisely controlled timing, speed, and amplitude. The compartmentalized and clustered organization of neurotransmitter receptors and their downstream signaling enzymes allows neuronal signals to be properly received and amplified. Synaptic adhesion molecules also form clustered assemblies to align pre- and postsynaptic subcompartments for synaptic formation, stability, and transmission. Recent studies indicate that such synaptic and subsynaptic compartmentalized organizations are formed via phase separation. This review discusses how such condensed subsynaptic compartments may form and function in the context of synapse formation and plasticity. We discuss how phase separation allows for the formation of multiple distinct condensates on both sides of a synapse and how such condensates communicate with each other. We also highlight how proteins display unique properties in condensed phases compared to the same proteins in dilute solutions.