Recent studies suggest that transcriptional activators and components of the pre-initiation complex (PIC) form higher order associations-clusters or condensates-at active loci. Considerably less is known about the distribution of repressor proteins responsible for gene silencing. Here, we develop an expression assay in living Ciona embryos that captures the liquid behavior of individual nucleoli undergoing dynamic fusion events. The assay is used to visualize puncta of Hes repressors, along with the Groucho/TLE corepressor. We observe that Hes.a/Gro puncta have the properties of viscous liquid droplets that undergo limited fusion events due to association with DNA. Hes.a mutants that are unable to bind DNA display hallmarks of liquid-liquid phase separation, including dynamic fusions of individual condensates to produce large droplets. We propose that the DNA template serves as a scaffold for the formation of Hes condensates, but limits the spread of transcriptional repressors to unwanted regions of the genome.