Clathrin-mediated endocytosis is initiated by a network of weakly interacting proteins through a poorly understood mechanism. Ede1, the yeast homolog of mammalian Eps15, is an early-arriving endocytic protein and a key initiation factor. In the absence of Ede1, most other early endocytic proteins lose their punctate localization and endocytic uptake is decreased. We show that in yeast cells, cytosolic concentration of Ede1 is buffered at a critical level. Excess amounts of Ede1 form large condensates which recruit other endocytic proteins and exhibit properties of phase-separated liquid droplets. We demonstrate that the central region of Ede1, containing a coiled-coil and a prion-like region, is essential for both the condensate formation and the function of Ede1 in endocytosis. The functionality of Ede1 mutants lacking the central region can be partially rescued by an insertion of heterologous prion-like domains. Conversely, fusion of a heterologous lipid-binding domain with the central region of Ede1 can promote clustering into stable plasma membrane domains. We propose that the ability of Ede1 to form condensed networks supports the clustering of early endocytic proteins and promotes the initiation of endocytosis.